PMI vs MIP: what's the difference?
Both are mortgage insurance, and they behave differently in the way that matters most. PMI sits on a conventional loan, is priced on your credit, and is designed to end once you have enough equity. MIP is the FHA's own premium, priced the same for everyone, and on most FHA loans it lasts the life of the loan — the exception being a down payment of 10% or more, which ends it after 11 years. If you put less than 10% down on an FHA loan, refinancing is the way out, not equity.
Side by side
| PMI | MIP | |
|---|---|---|
| Which loans | Conventional | FHA |
| Who insures | A private mortgage insurance company | The Federal Housing Administration |
| Charged up front | Not usually | Yes, an upfront premium, normally financed into the loan |
| Charged monthly | Yes, until it is removed | Yes, for the life of the loan on most FHA loans |
| Does it ever come off | Yes, at enough equity, and automatically at 78% of original value | Only if the down payment was 10% or more, and then after 11 years |
| Priced on your credit | Yes, substantially | No, the factors are set by HUD |
| Way out | Reach the equity threshold, or refinance | Refinance into a conventional loan |
Why there are no percentages on this page
PMI is quoted by private insurers against your credit score and your loan-to-value, so two buyers on the same house at the same price pay different amounts. FHA's MIP factors are set by HUD and have been changed more than once in recent years. A page that prints either number is showing you a snapshot of somebody else's loan on some particular day, and there is no way for you to tell which. The structure above is what stays true, and it is what should decide the loan; the pricing is a conversation with a loan officer on your actual profile.
Mortgage insurance, answered
What is the difference between PMI and MIP?
PMI is private mortgage insurance on a conventional loan, bought from a private insurer and priced on your credit and loan-to-value. MIP is the FHA’s own mortgage insurance premium, charged on every FHA loan at rates HUD sets regardless of your credit. The practical difference is that PMI is designed to end and MIP mostly is not: on most FHA loans the premium lasts the life of the loan, and the usual way out is to refinance into a conventional mortgage.
Does FHA mortgage insurance ever go away?
Only in one case: if the original down payment was 10% or more, MIP ends after 11 years. With less than 10% down, which is the common FHA scenario, it stays for the life of the loan no matter how much equity you build. That is the single most consequential fact about FHA financing and the one most often discovered late.
When does PMI come off a conventional loan?
You can request cancellation once you reach the equity threshold set by the loan, and the servicer must terminate it automatically when the balance reaches 78% of the home’s original value on the amortization schedule. Paying down principal or a rising valuation can get you there sooner, but the automatic termination is keyed to the original value, not today’s.
Is FHA still worth it if the insurance never stops?
Often yes, because it is not competing with a conventional loan you also qualify for. FHA exists to make a purchase possible at credit profiles and down payments conventional underwriting will not take. The right comparison is FHA now against renting for another two years, not FHA against a conventional loan you cannot get. Then refinance out when your credit and equity allow.
How much do PMI and MIP cost?
Deliberately not stated here, because both move. PMI is priced by private insurers on your credit score and loan-to-value, so two buyers on the same house pay different amounts. MIP factors are set by HUD and have been changed more than once in recent years. A loan officer can price both on your actual profile, and any figure a page gives you is a snapshot of somebody else’s loan.
Have both priced on your actual profile
PMI is quoted on your credit and loan-to-value, so the only useful comparison is the one run on your numbers. Pre-approval takes 24 hours with no application fee.
Figures on this page are estimates computed from the amounts, rates and terms stated, for information only. They are not a quote, an offer, or a commitment to lend or extend credit. Your rate is set at approval and your payment depends on credit approval, underwriting, the property, taxes, insurance and any HOA obligation. All loans subject to credit approval. Vanna Lending, LLC dba Blue Pebble Loans, NMLS #2447767, licensed in CO, CA, NM, FL, & TX. Equal Housing Opportunity.