An FHA loan lets you buy with as little as 3.5% down, but it carries two mortgage-insurance premiums — and below 10% down, the annual one never goes away. This calculator shows the real monthly payment and exactly how long you would pay MIP.
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FHA charges two premiums: an up-front MIP of 1.75% of the loan amount, almost always financed into the balance, and an annual MIP of 0.15%–0.75% of the balance billed monthly. Most 30-year borrowers with less than 10% down pay 0.55% annually.
It depends entirely on your down payment. Put less than 10% down and MIP lasts the life of the loan — the only exit is refinancing into a conventional loan. Put 10% or more down and MIP is cancelled after 11 years.
FHA allows a 3.5% down payment at a 580 credit score or above. Between 500 and 579 the minimum down payment rises to 10%. Individual lenders often set higher overlays than FHA's floor, so a 620+ score opens far more lenders.
FHA is usually cheaper up front and more expensive over time. It accepts lower credit scores and smaller down payments, but its mortgage insurance is harder to remove than conventional PMI, which cancels automatically at 78% loan-to-value.
Yes, and reaching 10% is the single most valuable threshold: it cuts the annual MIP rate and, more importantly, limits MIP to 11 years instead of the full loan term. On a 30-year loan that difference is typically tens of thousands of dollars.
Sources: HUD Mortgagee Letter 2023-05 — annual MIP schedule; HUD Handbook 4000.1 — FHA Single Family Housing Policy; HUD ML 2013-04 — MIP duration rules; Standard amortization (annuity) formula.
Estimates for educational purposes only — not a loan offer, financial advice, or a commitment to lend. Actual rates, payments, and terms vary by lender and creditworthiness.