finance
mortgage insurance premium
A mortgage insurance premium (MIP) is the insurance charge on FHA-insured loans that protects the lender if the borrower defaults. FHA borrowers usually pay an upfront MIP, which can be financed into the loan, plus an annual MIP paid monthly with the mortgage payment. How long annual MIP lasts depends on the loan terms and down payment. MIP is the FHA counterpart to private mortgage insurance on conventional loans.
- Exam tip
- MIP = FHA; PMI = conventional. FHA charges both upfront and annual premiums.
- Example
- On a $300,000 FHA loan with a 1.75% upfront MIP, the borrower finances $5,250 into the loan and also pays an annual premium monthly.
Related terms & state variants
Sources
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Last verified: 2026-10-23