Mortgage insurance explained: PMI vs FHA MIP, and how to stop it

What is mortgage insurance, and who does it actually protect?

Mortgage insurance pays the lender back if a low-down-payment loan is not repaid. You pay for it, but you are not the one insured. The Consumer Financial Protection Bureau (CFPB) says the same thing: PMI protects the lender, not you, if you stop paying.

So why would a buyer want it? Because it opens the door. Saving 20% down on a Las Vegas home can take years. Mortgage insurance lets a lender accept a much smaller down payment. So you can buy sooner and start building equity, which is the part of the home you own outright. Government loan insurance goes back to 1934. It is the invention that the history of the modern mortgage is built around.

PMI vs FHA MIP: what is the difference?

LTV means loan-to-value: your loan balance divided by the home's value. A $320,000 balance on a $400,000 home is an 80% LTV.

How much does mortgage insurance cost on a Las Vegas home?

PMI has no single price. Freddie Mac estimates you can expect to pay about $30 to $70 a month for every $100,000 you borrow. Where you land depends mostly on your credit score and how much you put down. FHA MIP works the other way. HUD sets one schedule, and your credit score does not change it.

Here is the same home both ways. Take a $400,000 Las Vegas home with 3.5% down ($14,000), so the base loan is $386,000. HUD's 3.5% minimum down payment for FHA applies to borrowers with a credit score of 580 or higher.

Two notes on this table. HUD figures the yearly MIP on the loan's average balance for that year, so the real monthly figure starts a little under $177 and slowly drops. And the same 3.5% down is used in both columns only so they compare the same home. Illustrative only, not a quote. These figures show mortgage insurance only. They leave out principal and interest, property taxes, and homeowners insurance, so they are not a full monthly payment. No interest rate or APR is shown because none is being offered. Your Loan Estimate shows your actual cost. That is the standard 3-page cost form a lender must give you after you apply.

When can you stop paying PMI?

The federal Homeowners Protection Act covers borrower-paid PMI on a loan for your primary home made on or after July 29, 1999. It gives three exits, all based on your home's original value:

• Ask at 80%. When your balance falls to 80% of the original value, you can ask your servicer in writing to cancel PMI. You need a good payment history and no second loan on the home. You also need proof the home has not lost value, such as an appraisal.
• Automatic at 78%. Your servicer must end PMI on the date your balance is scheduled to reach 78%, as long as you are current.
• Halfway point. Even if neither of those happened, PMI must still end. On a 30-year loan, the halfway point comes after 15 years. You must be current.

“Your lender or servicer must end the PMI the month after you reach the midpoint of your loan’s amortization schedule.”Consumer Financial Protection Bureau, “When can I remove private mortgage insurance (PMI) from my loan?” consumerfinance.gov

An amortization schedule is the month-by-month plan that pays your loan down to zero.

Our step-by-step guide covers the letter, the appraisal, and what to expect: how to remove PMI.

How close are you to dropping PMI?

Enter two numbers to see where you stand. Add today's value too if your home has gained value since you bought.

Can you remove PMI early because your home's value went up?

Sometimes. It depends on who owns your loan and what your servicer allows. The federal law only counts the original value, but loan investors can allow more. If Fannie Mae owns your loan, its servicing rules allow removal based on today's value:

• Loan 2 to 5 years old: your balance must be 75% or less of today's value.
• Loan more than 5 years old: your balance must be 80% or less of today's value.
• Payment record: current, with no payment 30 or more days late in the last 12 months, and none 60 or more days late in the last 24 months.
• Valuation: your servicer orders it through Fannie Mae's process. Your servicer may now reach out if your loan looks eligible, but removal still starts with your request.

Improvements you made, like adding a room, can let you ask before the 2-year mark, with an 80% limit. Routine repairs do not count. These rules apply to one-unit homes you live in or use as a second home. Rental properties have a stricter limit. If Freddie Mac or a bank owns your loan, ask your servicer for its rules, because they can differ.

How does FHA MIP work in 2026?

FHA charges an upfront premium of 1.75% of the loan amount. Most people add it to the loan. FHA also charges a yearly premium, split into your monthly payment. HUD set the current schedule in March 2023, and it is still in effect in 2026. Most 30-year FHA borrowers pay 0.55% a year with less than 5% down. With 5% or more down, they pay 0.50%. With less than 10% down, that yearly MIP stays for the life of the loan. With 10% or more down, it ends after 11 years. Full numbers, worked examples, and current Clark County loan limits: FHA mortgage insurance in 2026. For the story of the 2023 cut, see what the HUD MIP pricing update means for you.

What are all the ways to get rid of mortgage insurance?

Can you avoid mortgage insurance without 20% down?

Sometimes. Eligible veterans can use a VA loan, which has no monthly mortgage insurance at all. Some conventional lenders offer lender-paid PMI in exchange for a higher rate. It is worth pricing, but it is not always better, because you cannot cancel a higher rate later. Some FHA owners refinance into a conventional loan once their equity reaches 20%, which ends MIP. A refinance has its own closing costs, and the new rate may be higher or lower than your current one.