Quick answer: Mortgage insurance is a monthly cost that protects the lender, not you, when you buy with less than 20% down. On a conventional loan it is called PMI and it can be cancelled once you reach roughly 20% equity. On an FHA loan it is called MIP, it includes a 1.75% upfront fee plus an annual fee, and with less than 10% down it usually lasts for the life of the loan - which is why many FHA buyers later refinance out of it.
Key takeaways
- PMI (conventional) is removable; FHA MIP with under 10% down usually is not - the exit is a refinance.
- You can request PMI cancellation at 80% of original value; servicers must drop it at 78% (federal Homeowners Protection Act).
- FHA annual MIP is 0.55% or 0.50% for most 30-year borrowers under HUD's 2023 premium cut, still in effect in 2026.
- Your credit score changes PMI pricing a lot; it does not change FHA MIP at all.
What is mortgage insurance, and who does it actually protect?
Mortgage insurance reimburses the lender if a low-down-payment loan defaults. You pay for it, but you are not the insured party. Its real value to a buyer is access: instead of saving 20% down - easily six figures on a Las Vegas home - qualified buyers can close with 3% down conventional or 3.5% down FHA and start building equity years sooner. The idea is older than PMI itself: government loan insurance is the 1934 invention that the history of the modern mortgage is built around.
PMI vs FHA MIP: what is the difference?
| Conventional PMI | FHA MIP | |
|---|---|---|
| When required | Down payment under 20% | Every FHA loan, regardless of down payment |
| Upfront fee | None (monthly PMI) | 1.75% of the loan amount (can be financed) |
| Annual cost | Varies with credit score and LTV | 0.55% (under 5% down) or 0.50% (5%+ down) for most 30-year loans |
| Credit score effect | Large - strong credit pays far less | None - same premium at 580 or 780 |
| How it ends | Request at 80% LTV; automatic at 78% | 11 years with 10%+ down; otherwise life of loan |
| Typical exit | Time, appreciation, or extra principal | Refinance to conventional once equity allows |
When can you stop paying PMI?
The federal Homeowners Protection Act gives conventional borrowers two exits. You can request cancellation once your balance falls to 80% of the home's original value, if your payments are current. Your servicer must automatically terminate PMI when the balance reaches 78% on schedule. If Las Vegas prices have pushed your equity up faster than your amortization schedule, ask your servicer about cancellation based on current value - most investors allow it with a new valuation and a good payment history. Our step-by-step guide: how to remove PMI.
How does FHA MIP work in 2026?
FHA charges an upfront premium of 1.75% of the loan amount, usually financed into the loan, plus an annual premium paid monthly. Under the premium schedule HUD set in March 2023 - still in effect in 2026 - most 30-year FHA borrowers pay 0.55% annually with less than 5% down, or 0.50% with 5% or more down. With less than 10% down, that annual 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.
Example borrower scenario
Two buyers purchase the same $400,000 Las Vegas home with 3.5% down. The FHA buyer pays the same MIP whether their score is 600 or 760. The conventional buyer with a 760 score may pay meaningfully less monthly insurance than the FHA buyer - but the conventional buyer with a 620 score may pay more. This is why we price both paths on the same file before you choose. Illustrative only; your numbers will differ.
Can you avoid mortgage insurance without 20% down?
Sometimes. Eligible veterans can use a VA loan with no monthly mortgage insurance at all. Some conventional lenders offer lender-paid PMI in exchange for a slightly higher rate - worth pricing, not automatically better. And many FHA homeowners eventually refinance into a conventional loan once equity reaches 20%, dropping MIP entirely.
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Is PMI the same as FHA mortgage insurance?
No. PMI is private insurance on conventional loans and is cancellable at 20% equity. FHA MIP is a government premium with an upfront and an annual component, and under 10% down it usually lasts the life of the loan.
When can I stop paying PMI?
Request cancellation at 80% of original value; your servicer must drop it automatically at 78% if you are current (Homeowners Protection Act).
How much is FHA mortgage insurance in 2026?
1.75% upfront plus 0.55% or 0.50% annually for most 30-year borrowers, per the HUD schedule set in 2023 and unchanged in 2026.
Does mortgage insurance protect me?
No - it protects the lender. Your benefit is being able to buy with far less than 20% down.
Can I avoid mortgage insurance without 20% down?
Sometimes: VA loans for eligible veterans, lender-paid PMI, or refinancing out of FHA MIP once you have the equity. Each has tradeoffs worth pricing.
Sources
- CFPB: What is private mortgage insurance?
- CFPB: When can I remove PMI? (Homeowners Protection Act)
- HUD Mortgagee Letter 2023-05: annual MIP schedule
Facts last verified July 24, 2026 against HUD and CFPB publications.
