Last reviewed: 15 October 2026
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FHA MIP vs conventional PMI: what's the difference?
What mortgage insurance is for
The CFPB says mortgage insurance lowers the lender’s risk so you may qualify for a loan you might not otherwise get, and that it increases the cost of the loan. If you must pay it, it appears in your total monthly payment, your costs at closing, or both. If you fall behind, the insurance does not protect your credit or stop foreclosure; it helps the company that holds the mortgage if a foreclosure sale does not cover the balance.[1]
Conventional loans and PMI
On a conventional loan, the lender may arrange insurance with a private company. The CFPB says PMI rates vary by down payment and credit score and are generally cheaper than FHA rates for borrowers with good credit; most PMI is paid monthly with little or no initial payment at closing; and under certain circumstances you can cancel PMI.[1]
Federal cancellation and automatic termination dates for many borrower-paid PMI policies are explained in our guide when PMI must end under federal law (request at 80% of original value; automatic termination at 78% if current, with other conditions and exceptions).[2]
FHA loans and MIP
If you get an FHA loan, mortgage insurance premiums are paid to the FHA. The CFPB says FHA mortgage insurance is required for all FHA loans; it costs the same no matter your credit score, with only a slight increase for down payments under five percent; and it includes both an upfront cost (part of closing costs) and a monthly cost in the payment. You may be allowed to roll the upfront fee into the mortgage, which increases the loan amount and overall cost.[1]
HUD publishes the current upfront MIP rate in Appendix 1.0 – Mortgage Insurance Premiums of the FHA Single Family Housing Policy Handbook 4000.1. Check that appendix (and your Loan Estimate) for the figures that apply to your case rather than relying on a blog number.[4][5]
The Homeowners Protection Act’s definition of “private mortgage insurance” excludes insurance made available under the National Housing Act (FHA’s authority). Our PMI guide and the CFPB note that FHA and VA loans follow different requirements.[2][3]
USDA and VA (brief contrast)
The CFPB describes USDA loans as similar in structure to FHA (upfront plus monthly insurance) and typically cheaper, with the option to finance the upfront portion. VA-backed loans use an upfront funding fee instead of monthly mortgage insurance; fee amounts vary by service history, down payment, disability status, purchase vs refinance, and prior VA use.[1] See also VA funding fee, explained and conventional vs FHA, VA, and USDA.
Side-by-side (sourced, not a ranking)
| Topic | Conventional PMI (CFPB) | FHA MIP (CFPB / HUD) |
|---|---|---|
| Who receives the premium | Private insurer arranged by the lender[1] | FHA[1] |
| When it typically applies | Often when down payment < 20%[1] | Required for all FHA loans[1] |
| Pricing varies by credit score? | PMI rates vary by down payment and credit[1] | Same cost regardless of credit score; slight increase if down payment < 5%[1] |
| Upfront + monthly? | Most PMI monthly; little or no initial at closing[1] | Upfront and monthly; upfront may be financed[1] |
| Federal 80%/78% PMI end rules | Homeowners Protection Act can apply to covered PMI[2] | Not private MI under that Act; different FHA rules[2][3] |
This table compares structures the sources describe. It is not a recommendation of any loan type.
FAQ
Does mortgage insurance protect me if I miss payments?
No. The CFPB says it protects the lender, not you. Falling behind can still hurt your credit and lead to foreclosure.[1]
Can I cancel FHA MIP the same way as PMI at 80% or 78%?
The federal 80%/78% cancellation and termination framework in the Homeowners Protection Act is about private mortgage insurance. FHA MIP is government mortgage insurance under different rules; use FHA/HUD materials and your servicer for when FHA premiums end on your loan.[2][3]
Where do I find the current FHA upfront MIP rate?
HUD points lenders to Appendix 1.0 of Handbook 4000.1 for the upfront MIP rate. Use that appendix and your Loan Estimate.[4][5]
Where will MIP or PMI show up when I shop?
On the Loan Estimate, government upfront mortgage insurance or funding fees and PMI appear in the closing-cost sections the CFPB describes in its Loan Estimate explainer; monthly mortgage insurance appears in projected payments.[6] See how to read your Loan Estimate.
Does this site sell mortgage insurance?
No. This site earns nothing today. See how we make money.
This guide is general information, not legal or financial advice. We do not state whether any lender or loan is available to you.