FHA mortgage insurance has two separate charges: an upfront premium of 1.75% financed into the loan, and an annual premium that HUD sets by loan term, loan-to-value and loan size — 0.50%–0.55% of the base loan a year on a typical 30-year loan, 0.15%–0.40% on a 15-year one. The size of your down payment decides far more than the upfront fee — it decides whether that annual premium ever goes away. Cross 10% down and it can cancel after 11 years. Stay under it, and it rides for the life of the loan.
The two mortgage insurance premiums, and why they're not one number
Every FHA loan carries two separate insurance charges, and this calculator prices both. The upfront mortgage insurance premium (UFMIP) is a flat 1.75% of your base loan amount — not your home price — and it is not paid out of pocket. It is added to the loan balance, so you finance it and pay interest on it for the life of the loan.
That is HUD's full table for a purchase loan: term, LTV and loan size, read from Mortgagee Letter 2023-05 (effective for case numbers endorsed on or after March 20, 2023; still HUD's current annual-MIP letter when re-read on September 30, 2026). What it does not cover are two narrow cases — streamline refinances of loans endorsed before June 2009, and Hawaiian Home Lands loans, which carry no annual MIP.
The down payment that changes everything: 3.5% versus 10%
FHA's minimum down payment is famously 3.5%. What's less advertised is what that low a down payment does to your insurance bill for the next three decades. Take a $350,000 home financed at the Freddie Mac Primary Mortgage Market Survey rate for the week ending September 3, 2026 — 6.71% on a 30-year term, used here only as an illustrative rate, since FHA loans don't carry their own published market average and this calculator takes whatever rate you're quoted.
| 3.5% down | 10% down | |
|---|---|---|
| Base loan | $337,750 | $315,000 |
| LTV | 96.5% | 90.0% |
| Annual MIP rate | 0.55% | 0.50% |
| Upfront MIP (financed) | $5,911 | $5,513 |
| Loan amount | $343,661 | $320,513 |
| Monthly MIP | $155 | $131 |
| MIP cancels? | Never — life of loan | Yes — after 132 months (11 yrs) |
| Total MIP paid | $55,729 over 30 years | $17,325 over 11 years |
Computed from this calculator's own formula. Base P&I (excluding MIP) is $2,220/mo at 3.5% down and $2,070/mo at 10% down.
Notice what barely moves and what moves enormously. The upfront charge only drops by about $400 between the two scenarios, because it scales with a base loan that's only modestly smaller. The annual premium is the real story, and not because of its rate: on a 30-year loan it only drops from 0.55% to 0.50%. What crossing the 90% LTV line does — for a $350,000 home, the difference between $12,250 down and $35,000 down — is turn on an 11-year cancellation clock that an above-90%-LTV loan never gets. Over 30 years that's the difference between paying $55,729 in mortgage insurance and paying $17,325.
This calculator's cancellation logic follows HUD's own rule: MIP can end at 132 payments only if your loan-to-value at closing was 90% or below. If it wasn't, the annual premium is priced here for the full loan term, and the only ways out in the real world are refinancing into a conventional loan once you've built 20% equity, or paying the loan off.
A 15-year term lowers the MIP rate and shrinks the total
Loan term is the other input this calculator takes, and it's worth isolating from the down-payment effect above. Take the same 3.5%-down, $343,661 FHA loan and run it on a 15-year term at the PMMS 15-year rate of 6.04%, instead of the 30-year 6.71% used above.
| 15-year @ 6.04% | 30-year @ 6.71% | |
|---|---|---|
| Monthly P&I | $2,907 | $2,220 |
| Monthly MIP | $113 (0.40%) | $155 (0.55%) |
| Total interest | $179,678 | $455,484 |
| Total MIP paid (life of loan) | $20,265 | $55,729 |
HUD charges a lower annual rate on terms of 15 years or less (0.40% instead of 0.55% at this LTV), and the loan also finishes in half the time. Computed from this calculator's own formula.
Two things move at once here. HUD prices a 15-year FHA loan's annual premium lower — 0.40% of the base loan instead of 0.55% at this LTV, about $42 a month less — and the premium is paid for 180 months instead of 360. A borrower who can absorb the higher 15-year payment cuts the lifetime MIP bill by almost two-thirds, on top of the much larger interest savings. With 10% down on a 15-year term the rate falls to 0.15% and still cancels after 11 years.
How much FHA will actually insure in 2026
This calculator doesn't cap your home price, but HUD does. For 2026, the FHA floor — the loan limit in the lowest-cost housing markets — is $541,287 for a one-unit home. The ceiling, in the highest-cost markets, is $1,249,125. Your actual county limit sits somewhere between those two figures, set by local home prices, and it's worth checking before you assume FHA financing is available at your target price point.
The floor is the number that matters for most of this calculator's users. If your base loan amount is at or under $541,287 — which covers the large majority of U.S. home purchases — FHA financing is available anywhere in the country, county limits notwithstanding.
One thing this payment doesn't buy you: a tax deduction
It's tempting to soften the MIP numbers above by assuming at least part of them comes back at tax time. They don't. IRS Publication 936 states plainly that "the itemized deduction for mortgage insurance premiums has expired. You can no longer claim the deduction." That applies to FHA's annual MIP just as it applies to conventional PMI — treat the monthly premium figures in this calculator as a full, un-offset cost, not a pre-tax one.
Methodology
Upfront and annual MIP figures are computed by this calculator's own module from HUD Mortgagee Letter 2023-05: a flat 1.75% upfront premium, and an annual premium by term (over 15 years, or 15 years or less), LTV and base loan amount (at or below, or above, $726,200), cancelling after 11 years when LTV at closing is 90% or below. The letter was re-read at hud.gov on September 30, 2026. Worked examples use the September 3, 2026 Freddie Mac PMMS 30-year rate (6.71%) purely as an illustrative rate; FHA loans have no separate published market-average rate. Loan limits are HUD's 2026 figures.
Sources
- Freddie Mac — Primary Mortgage Market Survey, week ending September 3, 2026 — accessed 2026-09-05
- HUD — Mortgagee Letter, 2026 FHA Loan Limits (HUD No. 25-145) — accessed 2026-09-05
- IRS — Publication 936, Home Mortgage Interest Deduction (2025) — accessed 2026-09-05
- HUD — Mortgagee Letter 2023-05, annual MIP rates (effective March 20, 2023) — accessed 2026-09-30