Mortgage Insurance Premium (MIP)
The mortgage insurance required on FHA loans, protecting the lender against default. MIP includes an upfront premium (typically 1.75% of the loan amount) and an annual premium paid monthly. Unlike PMI on conventional loans, FHA MIP often lasts the life of the loan if you put down less than 10%.
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- FHA Loan
A mortgage insured by the Federal Housing Administration (FHA), allowing borrowers with credit scores as low as 580 to qualify with a 3.5% down payment (or 500 with 10% down). FHA loans require mortgage insurance premiums (MIP). Popular with first-time homebuyers.
- Private Mortgage Insurance (PMI)
Insurance that protects the lender (not you) if you default on a conventional mortgage with less than 20% down. PMI adds to your monthly payment and can be removed once you reach 20% equity. FHA loans have their own version called mortgage insurance premiums (MIP).
Frequently Asked Questions About Mortgage Insurance Premium (MIP)
What does Mortgage Insurance Premium (MIP) mean?
The mortgage insurance required on FHA loans, protecting the lender against default. MIP includes an upfront premium (typically 1.75% of the loan amount) and an annual premium paid monthly. Unlike PMI on conventional loans, FHA MIP often lasts the life of the loan if you put down less than 10%.
Is Mortgage Insurance Premium (MIP) important for my FICO® score?
Understanding Mortgage Insurance Premium (MIP) helps you manage your credit profile more effectively, which in turn supports a stronger FICO® score.