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FHA loans

FHA mortgage insurance: upfront and annual premiums explained

FHA's low down payment comes with a price that does not show up in the interest rate. Mortgage insurance on an FHA loan has two parts, and with the minimum down payment, the annual part stays for as long as you keep the loan.

Reviewed November 2026 · Written for Buy Home Tips from the sources listed below

FHA loans are insured by the Federal Housing Administration, part of HUD. Borrowers pay for that insurance in two ways: an upfront mortgage insurance premium, often shortened to UFMIP, and an annual premium paid monthly with the mortgage payment. Both protect the lender and FHA, not you.

FHA annual premium, base loan up to $726,200, term over 15 yearsLTV over 95%55bpsLTV over 90% to 95%50bpsLTV 90% or less50bps
FHA annual premium, base loan up to $726,200, term over 15 years. Rates from HUD Mortgagee Letter 2023-05, in basis points of the loan

The upfront premium

HUD Mortgagee Letter 2023-05 sets the upfront premium at 1.75 percent of the base loan amount for all mortgages it covers. The base loan amount is the loan before the premium is added. On a $289,500 base loan, the upfront premium is $5,066.25.

Most borrowers add the upfront premium to the loan instead of paying it at closing. That is convenient, but you then pay interest on it for as long as you carry the loan.

The annual premium

The annual premium is a percentage of the loan, divided into monthly installments. HUD's table depends on three things: the loan term, the base loan amount and the loan-to-value ratio.

For loans with a term of more than 15 years:

  • Base loan up to $726,200: 0.55 percent above 95 percent LTV, 0.50 percent at 95 percent or below
  • Base loan above $726,200: 0.75 percent above 95 percent LTV, 0.70 percent at 95 percent or below

For terms of 15 years or less, the rates are lower: 0.40 percent above 90 percent LTV and 0.15 percent at or below 90 percent for base loans up to $726,200, with a separate tier for larger loans.

How long it lasts

Duration is the part that surprises people. In HUD's table, the annual premium lasts 11 years when the loan-to-value at the start is 90 percent or less, and for the mortgage term when it is above 90 percent. With FHA's minimum 3.5 percent down, the LTV is 96.5 percent, so the premium runs for as long as the loan does. The usual ways out are refinancing into a different loan or paying off the mortgage.

Comparing with conventional loans

A conventional loan with less than 20 percent down usually requires private mortgage insurance. The CFPB explains that PMI protects the lender, is arranged by the lender and is provided by private companies. Its price depends heavily on your credit score and down payment, and it can generally be cancelled once you build enough equity. FHA's premium is set by HUD and depends far less on your credit.

That makes FHA attractive for borrowers with lower scores, and conventional loans often cheaper for borrowers with strong scores. The only way to know for your situation is to compare full Loan Estimates for both loan types on the same day.

What to watch on your documents

On your Loan Estimate, look for the upfront premium in the loan costs or added to the loan amount, and the monthly mortgage insurance in the projected payments table. Check that the same figures carry through to your Closing Disclosure. HUD can change premiums by mortgagee letter, so confirm current rates with your lender.

Mini calculator: FHA mortgage insurance

Upfront premium of 1.75% plus the annual premium for a loan term over 15 years with a base amount up to $726,200, using the rates in HUD Mortgagee Letter 2023-05.

Enter your figures to see the result. Nothing you type leaves this page.

Simplified: assumes the appraised value equals the price and a term over 15 years. Loans over $726,200 and terms of 15 years or less use different rates.

Questions about your premium

  • Ask whether the upfront premium will be paid in cash or added to the loan.
  • Check the Loan Estimate for the monthly mortgage insurance amount.
  • Note whether your loan-to-value is above 90 percent, which sets how long the annual premium lasts.
  • Compare the total cost with a conventional loan quote with private mortgage insurance.
  • Keep the figures for a future refinance decision.

Questions buyers ask

How much is FHA mortgage insurance?

The upfront premium is 1.75 percent of the base loan amount. For most purchase loans with a term over 15 years and a base amount up to $726,200, the annual premium is 0.55 percent of the loan above 95 percent loan-to-value and 0.50 percent at or below 95 percent, per HUD Mortgagee Letter 2023-05.

Can I remove FHA mortgage insurance?

For loans with a term over 15 years, HUD's table sets the annual premium duration at 11 years when the loan-to-value is 90 percent or less, and the mortgage term above 90 percent. With 3.5 percent down, it lasts for the life of the loan unless you refinance or pay it off.

Can I finance the upfront premium?

Yes, it is commonly added to the loan amount. That increases the loan and the interest you pay on it, so compare paying it in cash if you can.

Is FHA mortgage insurance the same as PMI?

No. Private mortgage insurance is used on conventional loans and has different pricing and cancellation rules. FHA's premiums are set by HUD.

Sources checked for this page

Checked November 2026. Programs and limits change; confirm with the source before you rely on a figure.

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