Credible
Get Rates
  • Refinance Student Loans
    • Compare Options
      • Best Refinancing Companies
      • Lender Reviews
      • Refinance Student Loans
      • Student Loan Consolidation
    • Learn the Basics
      • Fixed vs. Variable Rates
      • Forgiveness Programs
      • Consolidation vs Refinancing
      • Repayment Plans
      • More on Student Refi
    • How to
      • Consolidate Your Student Loans
      • Pay Off Your Student Loans
      • Lower Your Interest Rate
    • Tools
      • Current Student Loan Refi Rates
      • Refinancing Calculator
      • Repayment Calculator
  • Student Loans
    • Compare Options
      • Best Private Student Loans
      • Lender Reviews
      • Private Student Loans
      • Parent Student Loans
    • Learn the Basics
      • Student Loan Limits
      • Living Expenses
      • Applying for FAFSA
      • Federal Student Loans
      • Student Loan Interest Rates
      • More on Student Loans
    • How To
      • Pay for College
      • Take Out Student Loans
      • Apply Without Cosigner
      • Apply for Student Loans
      • Pay for Grad School
    • Tools
      • Current Student Loan Rates
      • Student Loan Interest Calculator: Estimate Payments
  • Personal Loans
    • Compare Options
      • Best Personal Loan Lenders
      • Lender Reviews
      • Get Personal Loan Rates
    • Learn the Basics
      • How to Qualify
      • How to Get a Loan
      • Where to Get a Loan
      • Personal Loans with Cosigner
      • Pay Off Credit Card Debt
      • More on Personal Loans
    • Best for
      • Credit Card Consolidation
      • Debt Consolidation Loans
      • Home Improvement Loans
      • Good Credit
      • Fair Credit
      • Bad Credit
    • Tools
      • Current Personal Loan Rates
      • Personal Loan Calculator
  • Mortgages
    • Compare Options
      • Mortgage Refinance
      • Home Loan
      • Mortgage Preapproval
      • Mortgage Payment Calculator
    • Compare Rates
      • Mortgage Refinance Rates
      • 30-Year Fixed Refinance Rates
      • 15-Year Fixed Refinance Rates
      • Home Loan Rates
      • 15-Year Fixed Mortgage Rates
      • 30-Year Fixed Mortgage Rates
    • Learn the Basics
      • How to Buy a House
      • How to Refinance Your Mortgage
      • How to Get the Best Rate
      • Cash-Out Refinancing
      • More on Home Loans and Refi
    • Pay Off Mortgage
      • Home Equity to Pay Off Debt
      • Paying Off Mortgage Early
      • Mortgage Refinance Cost
  • Company
    • About
    • Reviews
    • Blog
    • Lenders
    • Editorial Guidelines
    • FAQs
    • Press
  • Find My Rate
Advertiser Disclosure

How to Get Rid of FHA Mortgage Insurance

The fastest way to get rid of a MIP on an FHA loan might be to refinance into a conventional loan. If you have 20% equity, you can avoid paying PMI on the new loan.

Amy Fontinelle Amy Fontinelle Updated December 4, 2020

FHA mortgage insurance removal hero

Our goal is to give you the tools and confidence you need to improve your finances. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. Credible Operations, Inc. NMLS # 1681276, is referred to here as "Credible."

Mortgage insurance protects lenders from losing money on higher-risk borrowers who might default on their mortgages. This protection helps make home financing available to borrowers who otherwise might not qualify.

Typically, you’ll have to pay for private mortgage insurance on a conventional loan when your down payment is less than 20%. On FHA loans, however, all borrowers must pay mortgage insurance premiums no matter what size their down payment is.

Here’s what you should know about removing mortgage insurance from your FHA loan:

  • What is mortgage insurance?
  • How to get rid of mortgage insurance on an FHA loan
  • How to refinance your FHA loan into a conventional loan
  • Why you should compare offers from multiple lenders

What is mortgage insurance?

When it comes to mortgage insurance, private mortgage insurance (PMI) and mortgage insurance premiums (MIPs) are similar but come with some slight differences.

PMI:

  • Applies to conventional loans
  • Rates depend on your mortgage term, down payment, and credit score
  • Monthly costs between 0.14% and 1.86% of the loan amount, depending on your credit score and loan term

MIP:

  • Only applies to FHA loans
  • Rates depend on your mortgage term, down payment, and loan amount; your credit score isn’t a factor
  • Upfront premium cost of 1.75% of the loan amount; annual MIPs cost between 0.45% and 1.05% of the loan amount, depending on your down payment
 PMIMIP
Applies toConventional loansFHA loans
Costs
  • Monthly costs between 0.14% and 1.86% of the loan amount
  • Rates dependent on your credit score, down payment, and mortgage term
  • Upfront premium of 1.75% of the loan amount; annual MIPs between 0.45% and 1.05% of the loan amount
  • Rates dependent on your down payment, mortgage term, and loan amount; your credit score isn’t a factor

How to get rid of mortgage insurance on an FHA loan

Accumulating equity is not enough to get MIPs canceled for many FHA loans. If you took out an FHA loan after June 2, 2013, you can’t request MIP cancellation based on home price appreciation.

Good to know: MIPs can only be canceled if you put down at least 10% and, even then, they can’t be canceled until you’ve paid them for 11 years. The good news is that your servicer must cancel them automatically at this point.

The fastest and sometimes only way to remove MIPs on an FHA loan is to refinance into a conventional loan. If you have 20% equity, you can avoid paying PMI on the new loan.

You’ll want to know what today’s refinance rates are when considering this option. Credible makes refinancing easy. You can see your rates from our partner lenders in the table below in just three minutes. We also provide transparency into lender fees that other comparison sites don’t.

Refinance your FHA loan into a conventional loan

If you want to get rid of your mortgage insurance premiums, here’s how to refinance your FHA loan into a conventional loan.

1. First, make sure it will save you money

To find out if switching to a conventional mortgage will save you money, you’ll need to know how much your MIP is and how much you might have to pay in PMI. See how much you’re paying for your mortgage insurance premium by looking at your most recent monthly mortgage statement.

Finding out how much you might pay in PMI is a bit trickier. If you apply to refinance, lenders will give you an estimate of your PMI costs. Another option is to search online for private mortgage insurance rate cards and see what rate is most likely to apply to your situation given your credit score, equity, and the term of your new mortgage.

Here are a few examples of the annual PMI rates you might pay for a 30-year fixed mortgage:

  • 10% equity, 680 credit score: 0.65%
  • 15% equity, 740 credit score: 0.20%
  • 18% equity, 660 credit score: 0.38%

If you’re going from a MIP to PMI, it might be worth waiting to refinance until you have more equity or a higher credit score. Another option is to use savings or a gift to bring cash to closing so that you have enough equity to avoid PMI.

You’ll also need to consider the closing costs to refinance, which can run you 2% to 5% of the amount you’re borrowing.

Learn More: PMI: What Is Mortgage Insurance and Who Needs It?

2. Find out how much equity you have in your home

You generally need to have at least 20% equity in your home to refinance into a conventional loan without PMI.

To find out how much equity you have, use this formula:

(home value – loan balance) / home value

For example, if your home could appraise for $300,000 and you owe $200,000 on your mortgage, you have $100,000 of equity. $100,000 is 33.33% of $300,000, so you have about 33% equity.

To estimate what your home might appraise for, research what similar homes in your area have recently sold for.

3. Know if you qualify

Along with having enough equity, you will need a high enough credit score to qualify for a conventional loan: at least 620, depending on the lender and other aspects of your finances.

You’ll also need to show you have a steady, ongoing income and a debt-to-income ratio no higher than 43%.

Keep Reading: When to Refinance a Mortgage

Compare multiple lenders

If you’re going to spend the money on closing costs and take the time to refinance, it only makes sense to get offers from at least three lenders to see who can provide you the most savings.

Besides getting rid of FHA mortgage insurance, refinancing can have additional benefits. You might be able to:

  • Lower your monthly principal and interest payment
  • Shorten your loan term to pay less interest in the long run
  • Take cash out if you have enough equity

Here’s an example of how much you could save by refinancing your mortgage:

Let’s say your current mortgage balance is $200,000, your interest rate is 4.5%, and you have 15 years left on your 30-year mortgage. At your current rate, you’ll pay about $75,397 in interest over your remaining loan term.

If you can refinance into a new 15-year fixed-rate loan at 3.5%, you’ll take on a higher monthly payment, but you’ll also only pay about $57,357 over your remaining loan term, a savings of $18,040.

If you think refinancing out of your FHA loan is the right move for you, be sure to use Credible to easily compare offers from multiple lenders at once. Credible makes this easy — you can compare multiple lenders and see prequalified rates in as little as three minutes.

Find out if refinancing is right for you

  • Actual rates from multiple lenders – In 3 minutes, get actual prequalified rates without impacting your credit score.
  • Smart technology – We streamline the questions you need to answer and automate the document upload process.
  • End-to-end experience – Complete the entire origination process from rate comparison up to closing, all on Credible.

Find My Refi Rate
Checking rates will not affect your credit

Trustpilot

About the author
Amy Fontinelle
Amy Fontinelle

Amy Fontinelle is a mortgage and credit card authority and a contributor to Credible. Her work has appeared in Forbes Advisor, The Motley Fool, Investopedia, International Business Times, MassMutual, and more.

Read More

Home » All » Mortgages » How to Get Rid of FHA Mortgage Insurance

FHA Home Loan Basics


  • FHA Loans
  • FHA Loan Requirements
  • FHA vs. Conventional Loans
  • FHA Approved Condos
  • Get Rid of FHA Mortgage Insurance
  • First-Time Homeowner Programs
  • Refinance an FHA Mortgage

Home Loan Guides

  • How to Buy a House
  • How to Find the Best Lender
  • Down Payments: Ultimate Guide
  • Timeline: Home Buying Process
  • List: Mortgage Loan Types

Tools and Resources

  • Get a Home Loan
  • Get Preapproved for a Mortgage
  • Today’s Mortgage Rates
  • Mortgage Insurance Definition
  • Lender Reviews

  • Click to share on Facebook (Opens in new window)
  • Click to share on LinkedIn (Opens in new window)
  • Click to share on Twitter (Opens in new window)

Related Articles

Mortgages

Here’s What You Need to Know About Refinancing an FHA Loan

Mortgages

How to Lower Your Monthly Mortgage Payment: Guide

Mortgages

PMI: What Is Mortgage Insurance and Who Needs It?

  • Read More
    • Refi Student Loans
    • In School Loans
    • Personal Loans
    • Mortgages
  • Resources
    • Lender Reviews
    • Loan Calculators
    • Data Insights
    • Debt Statistics
    • Sitemap
  • Compare
    • Student Loan Refinance
      • Current Student Loan Refi Rates
    • Student Loan Consolidation
    • Private Student Loans
      • Current Student Loan Rates
    • Personal Loans
      • Current Personal Loan Rates
    • Refinance Mortgage
      • Mortgage Refinance Rates
        • 15-Year Fixed Refinance Rates
        • 30-Year Fixed Refinance Rates
    • Home Loans
      • Home Loan Rates
        • 15-Year Fixed Mortgage Rates
        • 30-Year Fixed Mortgage Rates
  • Top Lenders
    • Best Student Loan Refi Companies
    • Best Private Student Loans
    • Best Personal Loans
  • Company
    • About
    • Reviews
    • Blog
    • Editorial Staff
    • Editorial Guidelines
    • News
    • Press
  • Legal
    • Terms of Use
    • Privacy Policy

© 2021 Credible


Credible Operations, Inc. NMLS ID# 1681276 | NMLS Consumer Access | Licenses and Disclosures
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.