1. What is FHA Mortgage Insurance Premium (MIP)?

FHA Mortgage Insurance Premium (MIP) is a mandatory insurance payment for Federal Housing Administration (FHA) loans. It protects lenders against losses from borrower defaults. All FHA loans require MIP regardless of down payment amount.

2. How Does the Calculator Work?

The calculator uses the standard FHA MIP formula:

Where:

• \( Loan \) — The principal loan amount in USD
• \( 0.85\% \) — Standard annual MIP rate for most FHA loans
• \( 12 \) — Months in a year to calculate monthly payment

Explanation: The formula calculates the monthly insurance premium by converting the annual rate to a monthly payment.

3. Importance of MIP Calculation

Details: Understanding MIP costs helps borrowers evaluate total monthly housing expenses and compare FHA loans with conventional mortgage options.

4. Using the Calculator

Tips: Enter the loan amount in USD. The calculator assumes the standard 0.85% annual MIP rate for loans with terms greater than 15 years and loan-to-value ratios above 90%.

5. Frequently Asked Questions (FAQ)

Q1: How long do I pay FHA MIP?
A: For loans with ≤10% down, MIP lasts the entire loan term. For >10% down, typically 11 years.

Q2: Can I remove FHA MIP?
A: Only by refinancing to a conventional loan or reaching 78% LTV on loans originated before June 3, 2013.

Q3: Is MIP the same as PMI?
A: Similar concept but different programs. PMI is for conventional loans, MIP is for FHA loans.

Q4: Are MIP rates always 0.85%?
A: Rates vary by loan term and LTV ratio. 0.85% is standard for 30-year loans with <10% down.

Q5: Is MIP tax deductible?
A: Mortgage insurance premiums may be deductible if you itemize, subject to income limits.