How a Reverse Mortgage Works in Nevada

Reverse Mortgages

How a reverse mortgage works in Nevada: the HECM, explained calmly

VWVS Written by Valley West Editorial · Reviewed by Vatche Saatdjian, NMLS #69363 (Valley West Mortgage, NMLS #65506) · Expert-reviewed
Published August 6, 2026 · Updated August 21, 2026 · 16 min read

Valley West Mortgage is an independent mortgage lender, NMLS #65506. We are not a government agency, and we are not affiliated with, endorsed by, or acting on behalf of the U.S. Department of Housing and Urban Development (HUD), the Federal Housing Administration (FHA), or any other government agency. Whether any loan can be FHA-insured is decided by HUD's rules and your lender, not by this article. This is educational guidance only. Every dollar figure shown is an illustrative example, not a quote, an offer, a preapproval, or a commitment to lend.

The sixty-second version

Quick answer: A reverse mortgage lets homeowners age 62 or older draw on home equity with no required monthly mortgage payment. In Nevada, nearly all of them are HECMs (Home Equity Conversion Mortgages): FHA-insured loans available only through FHA-approved lenders. You keep title, and you keep paying property charges. The loan comes due at a maturity event such as death, sale, or moving out. It is also a non-recourse loan. Sale of the home satisfies the debt when the home is sold to repay it.

Here is how a reverse mortgage works in Nevada, without the sales pitch. This page replaced a 2014 post from our archive, and we rebuilt it the hard way. Specifically, every program rule below was re-verified against HUD's own Handbook 4000.1, Mortgagee Letters, and HECM pages. All of them were fetched the day this was published. Consequently, you will not find rate promises or retirement dreams here. Instead, you will find the actual federal rules. We cover who qualifies, what the HUD counseling requirement involves, and how the principal limit factor sets your number. Then come the costs, and exactly what happens to your heirs and the loan balance later. Read it before you talk to anyone, including us.

Key takeaways

  • One federally insured type. HUD is plain about this: the only reverse mortgage insured by the U.S. federal government is the Home Equity Conversion Mortgage, and it is available only through an FHA-approved lender.
  • Age 62 is a floor, set at closing. Every borrower must be at least 62 years of age as of the closing date. Moreover, the home must be, and must remain, your principal residence.
  • Counseling comes first. A lender cannot process your application until you complete a session with a counselor from HUD's HECM roster. That session earns you a Certificate of HECM Counseling (form HUD-92902).
  • Your number is the principal limit. It equals the maximum claim amount multiplied by a HUD-published principal limit factor. That factor depends on the age of the youngest borrower and the expected rate. In addition, most first-year draws are capped by the initial disbursement limit.
  • Heirs get options, not a bill. A HECM is a non-recourse loan. When the home is sold to repay the debt, the sale satisfies it. If the balance is higher than the value, HUD lets heirs sell for at least 95 percent of current appraised value.

What is a reverse mortgage, exactly?

A reverse mortgage is a home loan for older homeowners. It pays you from your equity instead of requiring a monthly mortgage payment from you. Interest and fees are added to the balance over time, so the debt grows while your remaining equity shrinks. However, you stay the owner. Title stays in your name, and the home stays your home while you meet the loan's conditions.

The version that matters in Nevada is the HECM, short for home equity conversion mortgage. HUD defines it as a non-recourse reverse mortgage. It gives a borrower access to the equity in their principal residence, with no corresponding monthly mortgage payment. It is an FHA-insured reverse mortgage. In fact, HUD states directly that it is the only reverse mortgage insured by the U.S. federal government. Furthermore, it is available only through an FHA-approved lender. Private lenders also offer proprietary reverse mortgages outside FHA insurance, mostly for very high home values. Those follow their own contracts, not the HUD rules on this page.

Equity is the part of the home's value you actually own, and it is the fuel a HECM runs on. If the concept feels slippery, start with our refresher on how equity, credit, and cash relate. It takes two minutes.

How a reverse mortgage works in Nevada, from counseling to closing

The HECM process runs on federal rails. Therefore, it works the same way in Las Vegas as it does anywhere else in the country. Specifically, HUD's Handbook 4000.1 lays out six moves:

  1. Complete HUD-approved counseling first. You meet with an independent counselor from HUD's HECM roster, by phone or face to face. Afterward, you receive a Certificate of HECM Counseling (form HUD-92902). You can find a counselor through HUD's search tool or by calling (800) 569-4287.
  2. Apply through an FHA-approved lender. Only after counseling can a lender process your application or order an FHA case number.
  3. Go through the financial assessment and appraisal. The lender reviews your credit history and your record of paying property charges, and an appraisal establishes the home's value.
  4. Learn your principal limit. The lender calculates it by multiplying the maximum claim amount by HUD's principal limit factor for your age and expected rate.
  5. Choose how to take the money. A fixed-rate HECM pays one lump sum at closing. An adjustable-rate HECM offers five flexible payment options, including a line of credit and monthly draws. Also, you can switch among those options later.
  6. Live in the home and keep property charges current. No monthly mortgage payment is required. Meanwhile, you certify your occupancy every year and keep paying taxes and insurance until a maturity event ends the loan.

That is the whole machine. The rest of this guide unpacks the parts that decide whether it is a good machine for you.

Who qualifies for a HECM?

HUD's eligibility rules are short but strict. First, every borrower must be at least 62 years of age as of the closing date. There is no maximum age. Second, the property must be your principal residence. Vacation homes and rentals do not qualify. Third, you must complete the counseling described above before a lender may process anything.

Older homeowners sitting together on the porch of their Las Vegas home at sunset, with Red Rock Canyon and the city skyline in the distance
HECM borrowers must be at least 62 years old and use the home as their primary residence.

The occupancy requirement is ongoing

The occupancy requirement does not end at closing. You will sign a written occupancy certification every year confirming the home is still your principal residence. Also, HUD expects you to notify your lender about absences longer than two months. That way, a long hospital stay does not get misread as a move-out. An absence for physical or mental illness only becomes a repayment trigger after 12 consecutive months. Even then, it matters only if no other borrower lives in the home.

The HUD counseling requirement is real protection

The HUD counseling requirement is not a formality. The counselor works for you, not the lender. The session exists so an independent person confirms you understand the costs, the alternatives, and the obligations before you sign. Lenders must give you a list of participating agencies, including telephone options and local agencies within driving distance. Treat the session as a free second opinion, because that is what it is.

Finally, expect a financial assessment. The lender must review whether you can sustain property charges like property taxes, homeowners insurance, and any HOA dues. If the assessment raises doubts, the lender may set aside part of your proceeds to pay those charges. As a result, that set-aside shrinks what you can draw.

How much can you actually borrow?

Your ceiling is called the principal limit, and two HUD numbers build it. The first is the maximum claim amount (MCA). It is the lesser of your home's appraised value and the HECM limit FHA publishes each year. For case numbers assigned in calendar year 2026, that national limit is $1,249,125, per HUD Mortgagee Letter 2025-22. The second is the principal limit factor (PLF). This multiplier comes from HUD's published tables. The factors key on the age of the youngest borrower (or eligible non-borrowing spouse) and the expected average mortgage interest rate. Multiply the MCA by the PLF and you have your principal limit. Older borrowers generally see higher factors because the loan is expected to run for fewer years.

We will not print sample factors here, because HUD updates the tables and your lender must use the current ones. Instead, remember the shape of the math: a percentage of your home's value, not all of it, becomes available. The gap is what protects the non-recourse promise later. If you are also weighing this against a traditional purchase or refinance, our mortgage calculators run standard principal-and-interest math, which works nothing like a HECM principal limit calculation.

The first-year cap: the initial disbursement limit

You usually cannot take everything at once. On an adjustable-rate HECM, first-year draws are capped by the initial disbursement limit. Under Handbook 4000.1, that cap is the greater of two numbers. The first is 60 percent of the principal limit. The second is your mandatory obligations (payoffs and costs required to close) plus 10 percent of the principal limit. Additionally, the cap can never exceed the principal limit remaining after any required set-asides. On a fixed-rate HECM, you instead receive a single advance at closing, with no future draws. Therefore, anyone planning to use a HECM as a standby line of credit should be comparing adjustable-rate options, not fixed.

What does a HECM cost?

A HECM is not cheap money, and the honest way to present it is to name the costs before the benefits. The distinctive one is FHA mortgage insurance, and it is what funds the guarantees on this page. The rates come from HUD Mortgagee Letter 2017-12, effective for case numbers assigned on or after October 2, 2017. The initial mortgage insurance premium is 2.00 percent of the maximum claim amount. Meanwhile, the annual MIP rate is one half of one percent (0.50 percent) of the outstanding mortgage balance. The initial premium is typically financed into the loan. The annual premium, in turn, accrues onto the balance instead of arriving as a bill.

Beyond MIP, expect an origination fee, third-party closing costs, and a servicing structure your lender must disclose. We are deliberately not quoting dollar figures for those, because they vary by transaction. Instead, your loan disclosures and your counseling session will put real numbers in front of you. Additionally, remember the carrying costs that never leave. Property taxes, homeowners insurance, and upkeep remain yours for the life of the loan.

How HECM MIP relates to other mortgage insurance

Note that HECM insurance is its own system. It is not the PMI on conventional loans, and it is not the forward-loan FHA MIP schedule either. For the full family tree, our introduction to mortgage insurance sorts out those cousins. Likewise, maybe what you really want is a traditional purchase or refinance with a low down payment. In that case, start with our FHA loans in Las Vegas guide.

Want straight answers before you go further?

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When does the loan come due?

A HECM has no scheduled payoff date. Instead, repayment is triggered by a maturity event. HUD's servicing rules in Handbook 4000.1 define them precisely, and they are worth reading in table form. After all, most reverse mortgage horror stories are really stories about one of these rows arriving as a surprise.

Maturity eventWhat actually counts under HUD's rules
DeathThe last surviving borrower dies. An eligible non-borrowing spouse who was identified at origination may qualify for a deferral period and remain in the home.
Sale or transferThe borrower conveys all title to the property and no other borrower retains title.
Move-outThe property stops being the principal residence of at least one borrower.
Extended absenceA borrower fails to occupy the home for more than 12 consecutive months because of physical or mental illness. Think of a long-term care stay, with no other borrower living there.
Unmet obligationsAn obligation of the loan goes unfulfilled. In practice this means property charges: delinquent property taxes, lapsed homeowners insurance, or the home falling into disrepair.

Read that last row twice. Nobody loses a home to a HECM for missing a mortgage payment, because there is none to miss. Instead, the avoidable failure mode is letting taxes or insurance lapse. Consequently, the single best habit for a HECM borrower is boring: keep the property charges current and keep proof.

What happens to your heirs and the loan balance?

This is the question families actually argue about. So here are HUD's own rules, from its fact sheet for heirs of FHA-insured HECMs. After the last surviving borrower dies, the loan is expected to be satisfied within 30 days. However, lenders may approve 90-day extensions while the estate is actively selling the home or arranging payoff. Property taxes and insurance stay the estate's responsibility until title transfers.

If your heirs want to...HUD's rules provide
Keep the homePay the loan balance in full. The house is theirs the moment the HECM is satisfied.
Sell, with equity leftSell the home, repay the balance from the proceeds, and keep every remaining dollar.
Sell, with the balance underwaterSell for at least 95 percent of the current appraised value. The lender must accept the net proceeds as satisfaction of the loan, and FHA insurance absorbs the shortfall.
Step awayTransfer title to the lender through a deed-in-lieu of foreclosure and walk away without pursuing the sale themselves.

A worked example, two ways

Illustrative example (not a quote): say a Las Vegas home sells for $420,000 after the borrower's death, and the HECM balance is $310,000. The sale repays the loan, and the estate keeps the remaining $110,000 before selling costs ($420,000 minus $310,000).

Now reverse the numbers: the balance has grown to $400,000, but the home appraises at only $350,000. HUD's rule lets the heirs sell for at least 95 percent of that appraised value, which is $332,500 (0.95 × $350,000). The lender accepts the net proceeds as full satisfaction, and FHA insurance covers its shortfall. Consequently, no one sends the family a bill for the difference.

That second scenario is the non-recourse loan guarantee doing its job, and it deserves precise wording. Non-recourse means the sale of the home satisfies the debt when the home is sold to repay the loan. The lender's remedy is the property, not the family's other assets. It does not mean the balance stops growing, and it does not erase the estate's duty to deal with the property. In short: heirs inherit choices and deadlines, not debt.

The Nevada angle

HECM rules are federal, so nothing above changes at the state line. What changes in Nevada is context. Las Vegas draws retirees with paid-down homes. Years of price growth left many long-time Clark County owners with meaningful equity that never shows up in monthly cash flow. For some of them, a HECM converts a paper number into breathing room. For others, selling and downsizing, a cash-out refinance with payments, or simply staying the course is the stronger play.

Meanwhile, the mechanics stay local. Your appraisal, your counseling options, your title work, and your closing all happen here, with Nevada professionals. Valley West Mortgage is a Las Vegas independent mortgage lender, licensed in Nevada. In fact, we have watched every version of this product since 2004.

The Valley West take: a reverse mortgage is a legitimate tool with a narrow best use. The right fit: a homeowner who is equity-rich, cash-tight, committed to staying put, and disciplined about property charges. It is a poor fit for short timelines, fragile budgets, or anyone who has not priced the alternatives. Take the HUD counseling seriously, and bring an heir into the conversation early. Then make the decision on paper, not on hope.

Prefer to talk it through with a person?

Valley West Mortgage has served Las Vegas since 2004. Ask us anything about the HECM rules on this page. Or ask us to weigh a reverse mortgage against a refinance, a sale, or doing nothing at all. Honest math, no pressure.

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Reverse mortgage FAQ

How does a reverse mortgage work in Nevada?

The same way it works everywhere in the U.S., because the HECM program is federal. You complete HUD-approved counseling, apply through an FHA-approved lender, and receive funds based on your principal limit. No monthly mortgage payment is required while you live in the home. Even so, you must keep paying property taxes, insurance, and upkeep. The loan is repaid after a maturity event, such as the last borrower's death or a permanent move. Usually, the sale of the home repays it.

Who is eligible for a HECM reverse mortgage?

Every borrower must be at least 62 years of age as of the closing date. Also, the home must be your principal residence. Finally, you must complete a counseling session with a HUD-approved counselor before a lender can process the application. The lender will also run a financial assessment of your credit and property-charge history, and the property must meet FHA standards.

Ownership, counseling, and obligations

Do I still own my home with a reverse mortgage?

Yes. Title stays in your name, exactly as with a traditional mortgage. The lender holds a lien, not ownership. You can sell whenever you choose, and the loan simply gets repaid from the proceeds at that point. What you cannot do is stop paying property charges or move out permanently, because those events make the loan due.

What is the HUD counseling requirement?

Every borrower, non-borrowing spouse, and non-borrowing owner must complete a session with an independent counselor from HUD's HECM roster. This happens before a lender may process a HECM application or order an FHA case number. The counselor issues a Certificate of HECM Counseling, form HUD-92902, which the lender must collect. You can find counselors through HUD's search tools or by calling (800) 569-4287, and telephone counseling is available.

Heirs, payoff, and buying with a HECM

What happens to my heirs and the loan balance when I die?

The loan becomes due after the last surviving borrower dies, and HUD expects it to be satisfied within 30 days. However, lenders may grant 90-day extensions while heirs actively sell or arrange payoff. Heirs can keep the home by paying the balance in full, or sell and keep any equity above the balance. If the balance exceeds the value, they can instead sell for at least 95 percent of current appraised value. The lender must accept the net proceeds as full satisfaction. An eligible non-borrowing spouse may qualify to stay under a deferral period.

Can my family end up owing more than the home is worth?

A HECM is a non-recourse loan, which means the sale of the home satisfies the debt when the home is sold to repay it. If the balance is larger than the sale brings in, FHA insurance covers the lender's shortfall. Your family's other assets stay out of it. The balance itself can grow past the home's value, but the repayment obligation is settled through the property. Moreover, HUD's 95-percent-of-appraised-value rule gives heirs a clean way to close it out.

Can I use a reverse mortgage to buy a home in Las Vegas?

Yes. HUD's HECM for Purchase program lets buyers age 62 and older combine a HECM with cash to buy a home. The buyer pays the difference between the purchase price plus closing costs and the HECM proceeds. It follows the same counseling, eligibility, and occupancy rules as a traditional HECM. Naturally, the home you buy must become your principal residence.

The bottom line

A reverse mortgage is neither a scam nor a miracle. It is a federally regulated loan with unusually strong consumer rails. The rails include mandatory independent counseling, a first-year initial disbursement limit, and an annual occupancy certification. On top of that, heirs get a non-recourse guarantee they can actually use. At the same time, it is expensive money that quietly consumes equity. It also punishes exactly one kind of neglect: unpaid property charges. Therefore, treat it the way HUD treats it, as a serious financial instrument with rules worth knowing cold. Start with the counseling session, and invite your family into the decision. Then, if you want a Nevada lender to run your real numbers honestly, we are easy to find.

Reviewed by
Vatche Saatdjian
President · NMLS #69363 · Valley West Mortgage NMLS #65506

Las Vegas mortgage expert since 2004 · Equal Housing Opportunity. Valley West Mortgage is an independent mortgage lender operating in 32+ states and DC, with offices at 8010 W Sahara Ave Ste 140, Las Vegas, NV. Find a loan officer →

Sources

  1. U.S. Department of Housing and Urban Development, Home Equity Conversion Mortgages for Seniors (the only federally insured reverse mortgage; FHA-approved lenders only; factors that set available funds; counselor roster and (800) 569-4287; HECM for Purchase): hud.gov
  2. HUD Handbook 4000.1, FHA Single Family Housing Policy Handbook, HECM sections II.B (non-recourse definition; age 62 as of closing; counseling before application processing; certificate HUD-92902; principal limit = MCA × principal limit factor; initial disbursement limit calculation; occupancy certification) and III.B (due and payable events, including 12-consecutive-month non-occupancy and unfulfilled property-charge obligations): hud.gov (PDF)
  3. HUD Mortgagee Letter 2017-12, HECM mortgage insurance premium rates (initial MIP 2.00 percent of the maximum claim amount; annual MIP 0.50 percent of the outstanding mortgage balance; effective for case numbers assigned on or after October 2, 2017): hud.gov (PDF)
  4. HUD Mortgagee Letter 2025-22, 2026 HECM limits (maximum claim amount $1,249,125 for case numbers assigned January 1 through December 31, 2026): hud.gov (PDF)
  5. HUD, Inheriting a Home Secured by an FHA-insured HECM (fact sheet: due and payable triggers; 30-day satisfaction with 90-day extensions; sale at 95 percent of current appraised value as full satisfaction; deed-in-lieu option; non-borrowing spouse certification): hud.gov (PDF)

Keep reading

Last updated: August 21, 2026. Every HUD program figure on this page (the 2026 maximum claim amount, HECM MIP rates, Handbook 4000.1 rules, and the heirs' fact sheet terms) was independently re-verified against HUD's live primary sources on this date, including confirming Handbook 4000.1 is now current through Update 18 (08/12/2026) without any change to the age-62, counseling, non-recourse, or maturity-event rules this page relies on. An original photograph and two new reference links (our mortgage calculators and our refinance guide) were also added. Every program rule was first verified on August 6, 2026, against Handbook 4000.1 HECM sections II.B and III.B (10/31/2023 edition), Mortgagee Letter 2017-12 (HECM MIP rates), Mortgagee Letter 2025-22 (2026 maximum claim amount $1,249,125), HUD's HECM program page, and HUD's fact sheet for heirs. The worked example was computed by hand ($420,000 minus $310,000 equals $110,000; 0.95 times $350,000 equals $332,500). No rate figures of any kind appear on this page by design.

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Valley West Mortgage, NMLS #65506. Equal Housing Opportunity. Submitting this form is not an application and is not a commitment to lend.

FHA vs Conventional Loans in 2026: Which Wins for Your Credit Score and Down Payment

Home Loans

FHA vs conventional loans in 2026: which wins for your credit score and down payment

VWVS Written by Valley West Editorial · Reviewed by Vatche Saatdjian, NMLS #69363 (Valley West Mortgage, NMLS #65506) · Expert-reviewed
Published July 19, 2026 · 7 min read

Valley West Mortgage is a local Las Vegas mortgage lender, NMLS #65506, and is not affiliated with or acting on behalf of FHA, HUD, or any government agency. This article is editorial guidance; figures shown are illustrative examples — not a quote, offer, or commitment to lend.

Quick answer: In 2026, FHA vs conventional usually comes down to credit score. Mid-600s and below, FHA usually wins: its mortgage insurance is flat-priced, so a 660 score pays the same 0.55% MIP as an 800. Around 720 and up, conventional usually wins: PMI gets cheap, there's no 1.75% upfront fee, and unlike FHA insurance at 3.5% down, PMI cancels once you build 20% equity.

The two loans are closer than most Las Vegas buyers think — until you price the mortgage insurance. Down payments are nearly identical (3.5% vs 3%), rates are in the same neighborhood, and both work for first-time homebuyers. The real fork is how each program charges for risk: FHA charges everyone the same, conventional charges by credit score. Here's the side-by-side, the 2026 numbers, and one house priced both ways at two different scores.

Key takeaways

  • Credit score decides: mid-600s and below usually FHA; 720+ usually conventional; the 680–720 band is worth pricing both ways (raising your score can flip the answer).
  • Down payment is a near-tie: 3.5% FHA vs 3% conventional — on a $450,000 home that's a $2,250 difference.
  • Mortgage insurance is the real difference: FHA adds 1.75% upfront (UFMIP) plus a flat 0.55% annual MIP at any score; conventional PMI is credit-priced and cancellable.
  • 2026 Las Vegas limits: $541,287 FHA (Clark County, one unit) vs the $832,750 conforming baseline.
  • FHAFHA loans in Las Vegas (2026)The local rulebook: who qualifies and what it costs.

How do FHA vs conventional loans compare in 2026?

Indeed, nine times out of ten the decision lives in two rows of this table: the credit floor and the mortgage insurance. Meanwhile, everything else — down payment, rates, property types — is close enough that it rarely tips the choice on its own.

“The Federal Housing Administration (FHA) - which is part of HUD - insures the loan, so your lender can offer you a better deal.”U.S. Department of Housing and Urban Development “Let FHA Loans Help You” — hud.gov
FHA vs conventional at a glance, 2026. Program rules per HUD Handbook 4000.1 and Fannie Mae/Freddie Mac guidelines; MI figures illustrative.
FactorFHAConventional
Minimum down payment3.5% (with a 580+ score)3% (first-time-buyer or income-limited programs; otherwise typically 5%)
Credit score floor580 (500–579 possible with 10% down)620
Upfront mortgage insurance1.75% UFMIP, usually financed into the loanNone
Monthly mortgage insuranceFlat 0.55% annual MIP at 3.5% down (0.50% with 5%+ down) — same price at every credit scoreCredit-priced PMI — inexpensive at 760+, costly in the mid-600s
When the insurance endsUnder 10% down: life of the loan — refinancing is the exit. 10%+ down: after 11 yearsCancel by request at 80% LTV; ends automatically at 78% (Homeowners Protection Act)
2026 loan limit (one unit)$541,287 in Clark County, Nevada$832,750 conforming baseline
Debt-to-income flexibilityMore forgiving — higher DTIs approved with compensating factorsTypically to ~45%, up to ~50% with strong automated approval
Who it usually fitsScores in the mid-600s and below, thinner credit, higher DTIScores around 720+, wants the MI to cancel, higher-priced homes

What credit score do you need for FHA vs conventional?

The floors are 580 for FHA (with 3.5% down) and 620 for conventional — but the floors aren't the real story. In contrast, conventional pricing is tiered: agency loan-level price adjustments mean a 660 score with a small down payment pays a meaningfully worse rate and a much bigger PMI premium than a 760 score on the identical house. FHA runs the opposite way — the 1.75% upfront premium and the 0.55% annual MIP are the same whether you're at 590 or 800. That's why the crossover usually sits around the high-600s to low-700s: below it, FHA's flat pricing is a subsidy; above it, it's a tax. If you're near a tier edge, a 20–40 point score improvement before you apply can flip which loan wins.

Worked example: one $450,000 house, two credit scores

Same Las Vegas house, same illustrative 6.5% rate on a 30-year fixed — only the credit score changes. For instance, FHA: 3.5% down is $15,750, leaving a $434,250 base loan; adding the 1.75% upfront premium (UFMIP ≈ $7,599, financed) makes it $441,849. Conventional: 3% down is $13,500, leaving a $436,500 loan with no upfront fee. Monthly MIP is $441,849 × 0.55% ÷ 12 ≈ $203; PMI is quoted by score — we use an illustrative 0.60% for the 760 buyer and 1.25% for the 660 buyer. Taxes and homeowners insurance excluded.

Illustrative comparison only — not a quote, offer, or commitment to lend. Actual rates, PMI quotes, and pricing adjustments vary by borrower and lender.
FHA 3.5% down (either score)Conventional 3% down, 760 scoreConventional 3% down, 660 score
Loan amount$441,849 (incl. financed UFMIP)$436,500$436,500
Principal & interest @ 6.5%$2,793$2,759$2,759
Monthly mortgage insurance$203 (0.55% MIP)$218 (0.60% PMI)$455 (1.25% PMI)
Total P&I + MI$2,995$2,977$3,214
Verdict vs FHA—Conventional saves ~$18/mo, skips the $7,599 UFMIP, and the PMI cancelsFHA saves ~$218/mo — about $2,620 a year

Two honest footnotes. First, we held the rate equal to isolate the mortgage insurance — in the real market, a 660-score conventional quote usually carries a higher rate than the 760 quote too, which widens FHA's advantage further. Second, the 760 buyer's edge is bigger than $18: no $7,599 upfront premium, and their $218 PMI disappears at 20% equity while the FHA buyer's $203 MIP runs for the life of the loan at this down payment.

When does FHA win — and when does conventional?

FHA usually wins when:

  • Your score is in the mid-600s or below — flat MIP beats credit-priced PMI.
  • Your score is 500–579 and you can put 10% down, or 580+ with 3.5% — conventional's 620 floor is out of reach.
  • Your debt-to-income ratio is high — FHA approves more files above conventional's comfort zone.
  • Your credit history is thin or recently repaired — FHA underwriting is built for it.

Conventional usually wins when:

  • Your score is around 720 or higher — PMI gets cheap and there's no 1.75% upfront fee.
  • You're putting 10–20%+ down — PMI shrinks or vanishes while FHA still charges MIP.
  • You want the insurance to end on its own — PMI cancels at 80% LTV, automatically at 78%.
  • The price is above $541,287 — past Clark County's FHA limit, conforming room runs to $832,750.

Conventional also has an income-limited lane that most comparisons skip. Freddie Mac's Home Possible and Fannie Mae's HomeReady sit inside the ordinary conforming rules, with lighter mortgage insurance for households at or below their area median income. If that describes your file, read how Home Possible and HomeReady differ before settling on FHA.

Valley West takeThe buyers who overpay are almost always in the 680–720 band — the zone where the winner isn't obvious and most people just take whichever loan gets suggested first. Consequently, that band is exactly where we price every file both ways. As a lender we also shop the PMI quote itself across insurers, which can move the conventional number more than a rate change would. And if FHA wins today, we set the exit at closing: the plan to refinance into conventional the moment equity and score make the MIP unnecessary.

Price your file both ways in ten minutes.

Specifically, a Las Vegas loan officer runs your actual score, down payment, and debts through FHA and conventional side by side — real numbers, not rules of thumb. No obligation.

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The exit plan: how to refinance out of FHA MIP

Choosing FHA at 3.5% down isn't choosing MIP forever — it's choosing it until you refinance. Because annual MIP at under 10% down runs for the life of the loan, the standard play is: buy with FHA while your score is mid-600s, spend two or three years building equity and credit, then refinance into a conventional loan at 80% LTV or below — no PMI, no MIP, done. Even landing between 80% and 95% LTV can work if your improved score prices PMI below the 0.55% MIP you're dropping. Conventional borrowers get a cheaper version of the same move: PMI removal by request at 80% LTV, no refinance required. The one number to respect: refinancing only pays if the all-in monthly savings clear the closing costs within your expected stay.

Not sure which side of the line you're on?

Send us the basics — score range, savings, target price — and we'll show you FHA vs conventional on your numbers, plus what a refinance exit would look like later.

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FHA vs conventional FAQ

Is FHA or conventional better for a 620 credit score?

Usually FHA. Conventional is technically available at 620, but PMI and rate pricing at that score with a small down payment are expensive — FHA's flat-priced MIP typically produces the lower payment. However, price both to be sure.

What credit score do you need for FHA vs conventional?

FHA: 580 with 3.5% down (500–579 requires 10% down). Conventional: 620 minimum, with pricing that keeps improving in tiers up to about 780.

Can I switch from FHA to conventional later?

Yes — that's the standard exit. For example, refinance into conventional at 80% LTV or below and the MIP is gone with no PMI replacing it. As a result, many buyers start FHA and refinance out within a few years.

Does FHA mortgage insurance ever cancel on its own?

With less than 10% down, no — it runs for the life of the loan. With 10%+ down it drops after 11 years. On the other hand, conventional PMI cancels at 80% LTV and ends automatically at 78%.

What are the 2026 loan limits in Las Vegas?

$541,287 for a one-unit FHA loan in Clark County; $832,750 for the conforming baseline. Therefore, between those numbers, conventional is often the only low-down-payment option.

Is FHA always cheaper when my score is low?

Usually below roughly 680, but not always — PMI quotes vary by insurer and down payment, and seller credits can change the math. In short, price the identical file both ways.

The bottom line

FHA vs conventional isn't a loyalty question — it's arithmetic that changes as your credit score does. Mid-600s and below, FHA's flat mortgage insurance is usually the win. At 720+, conventional's cheap, cancellable PMI usually takes it. In between, the only honest answer is to price your exact file both ways — and whichever you start with, know your exit before you close. The full conventional picture, limits, PMI exit and all, lives in our conventional loans in Las Vegas guide. If your score is the deciding factor, start with which program a 710 credit score opens.

Reviewed by
Vatche Saatdjian
President, Valley West Mortgage · NMLS #65506

Las Vegas mortgage expert since 2004 · Equal Housing Opportunity. Valley West Mortgage is a Las Vegas based mortgage lender serving 32+ states and DC, with offices at 8010 W Sahara Ave Ste 140, Las Vegas, NV. Find a loan officer →

Sources

  1. HUD Handbook 4000.1 — FHA credit, down payment, and MIP requirements: hud.gov
  2. HUD — FHA announces 2026 loan limits: hud.gov
  3. FHFA — Conforming loan limit values for 2026 ($832,750 baseline): fhfa.gov
  4. CFPB — What is private mortgage insurance?: consumerfinance.gov

Writing your own paycheck? See our self-employed mortgage guide for how lenders count your income on either program.

Across Valley West: Ready to price both sides for real? Our program-specific sites go deeper: FHAHomeLoans.services and ConventionalHomeLoans.services.

Keep reading

Last updated: July 19, 2026 — published with 2026 loan limits ($832,750 conforming / $541,287 Clark County FHA), current MIP pricing, and the 660-vs-760 worked example.

Talk to a Valley West specialist

Valley West Mortgage, NMLS #65506. Equal Housing Opportunity. Submitting this form is not an application and is not a commitment to lend.

FHA Mortgage Insurance in 2026: What MIP Really Costs (and When It Goes Away)

FHA Guides

FHA mortgage insurance in 2026: what MIP really costs, and when it goes away

VWVS Written by Valley West Editorial · Reviewed by Vatche Saatdjian, NMLS #69363 (Valley West Mortgage, NMLS #65506) · Expert-reviewed
Published July 17, 2026 · 13 min read · Fact-checked against HUD Mortgagee Letter 2023-05 and HUD Handbook 4000.1

Valley West Mortgage is an independent mortgage lender, NMLS #65506. This article is editorial guidance; figures shown are illustrative examples — not a quote, offer, or commitment to lend. Valley West Mortgage is not affiliated with or endorsed by HUD or the FHA.

Quick answer: FHA mortgage insurance in 2026 costs 1.75% of the loan amount once at closing (usually financed into the loan) plus 0.55% per year on most 30-year loans with 3.5% down — 0.50% with 5%+ down. With less than 10% down it lasts the life of the loan; with 10%+ down it ends after 11 years.

FHA mortgage insurance costs two things in 2026: a one-time 1.75% upfront premium, usually financed into the loan, and an annual premium of 0.55% for most 30-year loans (0.50% with 5%+ down), built into the monthly payment. Here is exactly how the premiums work, what they cost in dollars, and the three ways they go away.

Key takeaways

  • FHA charges two premiums: a 1.75% upfront MIP (usually financed into the loan, per HUD) and an annual MIP of 0.55% for most 30-year loans with the minimum down payment — 0.50% if you put at least 5% down.
  • HUD cut the annual premium by 30 basis points in March 2023 (most borrowers previously paid 0.85%), and the lower pricing is still in effect in 2026.
  • With less than 10% down, annual MIP lasts the life of the loan; with 10%+ down it drops off automatically after 11 years. Most borrowers exit sooner by refinancing to conventional once they reach ~20% equity.
  • FHA MIP is not priced by credit score — the premium is the same at 580 as at 780, which is why FHA often wins for buyers still building credit.
  • FHAFHA loans in Las Vegas: the 2026 guideRequirements, limits, and the five-step path to apply.
In short:
  1. Plan for 1.75% once at closing (usually rolled into the loan) plus 0.55%/yr built into the monthly payment on a typical 3.5%-down 30-year FHA loan.
  2. On a $400,000 base loan that's roughly $183/month of MIP — an illustrative example, not a quote.
  3. MIP is the price of the 3.5%-down, credit-flexible FHA program; whether it beats conventional PMI depends mostly on your credit score.

What is FHA mortgage insurance?

FHA mortgage insurance premium (MIP) is the fee that funds the FHA program's guarantee. Because the Federal Housing Administration insures the lender against loss, lenders can approve buyers with as little as 3.5% down (580+ credit score) and credit profiles that conventional loans would price heavily. In exchange, every FHA borrower pays two premiums — one upfront at closing and one annually, divided into the monthly payment.

If you're comparing programs first, start with our mortgage calculators or check today's rates, then come back to the MIP math below.

How much does FHA mortgage insurance cost in 2026?

Two parts: 1.75% once, then 0.55% (or 0.50%) per year, per HUD's current premium schedule (Mortgagee Letter 2023-05, still in effect):

  • Upfront MIP (UFMIP): 1.75% of the base loan amount, charged once at closing. Most borrowers finance it into the loan rather than paying cash.
  • Annual MIP: 0.55% of the loan amount per year for most 30-year loans with the minimum 3.5% down, or 0.50% with at least 5% down. It's divided by 12 and added to each monthly payment.
1.75%Upfront premium, one time — usually financed into the loan
0.55%Annual MIP on most 30-year loans with 3.5% down
11 yrsWhen annual MIP ends automatically with 10%+ down
$541,2872026 FHA limit, one-unit home, Clark County (HUD)

Sources: HUD Mortgagee Letter 2023-05; HUD FHA mortgage limits, 2026.

What is the FHA MIP rate for 2026? On most 30-year FHA loans the annual MIP is 0.55% of the loan balance with under 5% down, or 0.50% with 5% or more down, plus a one-time 1.75% upfront premium. Annual MIP lasts 11 years with 10% down — otherwise the life of the loan.

The chart below is the full 2026 FHA MIP chart — every annual premium tier in HUD’s current schedule, sorted by loan term, base loan amount, and loan-to-value (LTV):

2026 FHA MIP chart — annual mortgage insurance premium by loan term, base loan amount, and loan-to-value (LTV), per HUD’s current schedule (Mortgagee Letter 2023-05). A one-time upfront premium (UFMIP) of 1.75% of the base loan amount applies at closing on top of every row below. Illustrative — your figures become real on your Loan Estimate. Not a quote, offer, or commitment to lend.
Loan termBase loan amountLTV (down payment)Annual MIPHow long it lasts
More than 15 years
(e.g., 30- or 20-year)		At or below $832,750Above 95% (under 5% down)0.55%Life of the loan
90.01%–95% (5%–9.99% down)0.50%Life of the loan
90% or less (10%+ down)0.50%11 years
Above $832,750Above 95% (under 5% down)0.75%Life of the loan
90.01%–95% (5%–9.99% down)0.70%Life of the loan
90% or less (10%+ down)0.70%11 years
15 years or lessAt or below $832,750Above 90% (under 10% down)0.40%Life of the loan
90% or less (10%+ down)0.15%11 years
Above $832,750Above 90% (under 10% down)0.65%Life of the loan
78.01%–90% (10%–21.99% down)0.40%11 years
78% or less (22%+ down)0.15%11 years

Chart reflects HUD Mortgagee Letter 2023-05, effective for loans endorsed on or after March 20, 2023 and still in force. HUD ties the base-loan-amount tier to the national conforming loan limit; the $726,200 shown in the letter was the 2023 limit, and for 2026 that limit is $832,750. Upfront MIP is 1.75% of the base loan amount, charged once at closing. Last verified against the HUD schedule on July 24, 2026.

Worked example — illustrative only

On a $400,000 base loan with 3.5% down:

$400,000 × 0.55% ÷ 12 ≈ $183/month of annual MIP

$400,000 × 1.75% = $7,000 upfront MIP, financed into the loan

Actual figures depend on your loan amount, down payment, and term — they become real on your Loan Estimate, not before.

Valley West takeThe MIP number that matters isn't the percentage — it's the total monthly payment, FHA vs. conventional, run the same day. FHA premiums don't rise for lower credit scores; conventional PMI does, steeply. In our experience a Las Vegas buyer in the mid-600s with 3.5%–5% down often comes out ahead with FHA even after MIP, while a 740+ buyer with 10% down almost always prices better conventional. That's a 10-minute side-by-side, not a guess.

How much is FHA mortgage insurance per month?

On a 30-year FHA loan with the minimum 3.5% down, annual MIP runs about $138 to $248 a month across the loan sizes most Clark County buyers use. The quick rule of thumb: at 0.55% you pay roughly $0.46 per month for every $1,000 of base loan, and at 0.50% (5% or more down) it is about $0.42 per $1,000. HUD publishes the percentages; the chart below turns them into the dollar figure that actually lands in your payment.

2026 FHA monthly MIP chart, annual premium converted to a monthly dollar amount for 30-year loans at or below the $832,750 tier, per HUD’s current schedule (Mortgagee Letter 2023-05). Monthly MIP only: this is one line of your payment, not the whole payment, and it excludes principal, interest, taxes and homeowners insurance. Illustrative, rounded to the nearest dollar. Your figures become real on your Loan Estimate. Not a quote, offer, or commitment to lend.
Base loan amountMonthly MIP at 0.55%
(3.5% down)		Monthly MIP at 0.50%
(5%+ down)		Upfront MIP (1.75%)
one time at closing
$300,000$138$125$5,250
$350,000$160$146$6,125
$400,000$183$167$7,000
$450,000$206$188$7,875
$500,000$229$208$8,750
$541,287
2026 Clark County FHA limit		$248$226$9,473

Two things borrowers routinely get wrong here. First, the upfront premium is not a monthly cost: it is charged once at closing and is almost always financed into the loan, so it raises your balance rather than your monthly MIP line. Second, the monthly figure is calculated on the base loan amount, so a financed UFMIP does not increase it. If you put 10% or more down, you pay the same 0.50% but it stops after 11 years instead of running for the life of the loan.

Is the FHA upfront mortgage insurance premium (UFMIP) still 1.75% in 2026?

Yes — the FHA upfront mortgage insurance premium (UFMIP) is still 1.75 percent of the base loan amount in 2026. HUD prices it as 175 basis points. That figure comes straight from HUD Handbook 4000.1 — the rulebook for FHA mortgage insurance — which charges the same UFMIP on every amortization term. Appendix 1.0 of the handbook lists only narrow exceptions:

  • Streamline or Simple refinances of FHA loans endorsed on or before May 31, 2009 — a token 0.01% instead.
  • Hawaiian Home Lands loans (Section 247), which use their own premium schedule.
  • Indian Lands loans (Section 248), which charge no UFMIP at all.

Everyone else pays 1.75%. HUD gives you exactly two ways to pay it. Most borrowers have the premium financed into the loan; the alternative is paying it entirely in cash at closing. There is no splitting the difference — the handbook requires one route or the other in full. Helpfully, HUD does not count a financed UFMIP against FHA loan limits or LTV caps. Rolling it in does not shrink your buying power.

Also keep annual MIP versus upfront MIP straight — both are FHA mortgage insurance, but they behave differently. The upfront premium hits once at closing. The annual premium — 0.55% or 0.50% for most 30-year loans — recurs inside every monthly payment.

The MIP refund schedule: FHA-to-FHA within three years

The upfront premium is not refundable, with one exception. Refinance your current FHA loan into another FHA loan within three years, and HUD applies a refund credit. That credit reduces the UFMIP on the new loan. An FHA-to-FHA streamline refinance is the most common way to claim it. Our FHA streamline vs. conventional guide walks through when that move makes sense. Either way, the credit only offsets the new loan’s upfront premium; HUD never pays it out as cash.

HUD’s MIP refund schedule — UFMIP refund percentage by month for FHA-to-FHA refinances within 3 years, per HUD Handbook 4000.1, Section II.A.8 (hud.gov). Each value is the percentage of your original upfront premium credited against the new loan’s UFMIP.
Month of year123456789101112
Year 1807876747270686664626058
Year 2565452504846444240383634
Year 3323028262422201816141210

Refund percentages reproduced verbatim from HUD Handbook 4000.1, Section II.A.8 (handbook last revised November 26, 2025). All values are percentages of the original UFMIP.

The pattern is simple: 80% in month one, falling two percentage points every month, down to 10% in month 36. So the credit is rich early and gone after year three. Mechanically, your lender requests a Refinance Authorization Number through FHA Connection. That system computes the exact credit from your dates. One wrinkle: at least one borrower on the new loan must already hold title as of the case number assignment date.

Worked example — illustrative only

Say you closed an FHA loan with a $300,000 base loan amount 14 months ago:

Original UFMIP: $300,000 × 1.75% = $5,250

Month 14 = year 2, month 2 on HUD’s table → 54% credit: $5,250 × 54% = $2,835

New $290,000 streamline: $290,000 × 1.75% = $5,075 − $2,835 = $2,240 UFMIP due

Illustrative math only — FHA Connection computes your actual credit from your real dates and amounts, and figures become final on your Loan Estimate. Not a quote, offer, or commitment to lend.

Past the three-year mark, the refund is off the table. The exit decision becomes pure payment math instead. For that, start with our Las Vegas refinance hub, then check the refi-out-of-MIP math our FHA site runs for Las Vegas borrowers.

Didn't FHA mortgage insurance used to cost more?

Yes — most FHA borrowers paid 0.85% annually before March 2023. HUD's Mortgagee Letter 2023-05 announced a reduction of "30 basis points" to the annual premium, and that pricing remains in place in 2026. If an older article scared you off FHA over "expensive mortgage insurance," the math has genuinely improved — on a $400,000 loan, the cut is worth about $100/month.

HUD announced "a 30 basis point reduction to the Annual Mortgage Insurance Premiums" for most FHA loans, effective March 20, 2023 — pricing that still stands in 2026.

— HUD Mortgagee Letter 2023-05, U.S. Department of Housing and Urban Development

When does FHA mortgage insurance go away?

Three exits: automatic removal at 11 years (10%+ down), refinancing to conventional, or paying off the loan.

  • Less than 10% down: annual MIP stays for the life of the loan.
  • 10% or more down: annual MIP ends automatically after 11 years — here’s the step-by-step way to remove FHA MIP when that day comes.

In practice, most FHA borrowers don't wait. Once the home has appreciated and the loan balance is under 80% of the home's value, many refinance into a conventional loan with no mortgage insurance at all. FHA is often the door in — not the loan you keep for 30 years. When you're ready to model that exit, a Valley West loan officer can run the refinance break-even for you.

FHA MIP vs. conventional PMI: which costs less?

It depends mostly on your credit score. Conventional private mortgage insurance (PMI) is priced by credit tier; FHA MIP is flat. Here's the honest comparison:

FHA MIP vs. conventional PMI — structural differences, not pricing. Your actual costs are confirmed on a Loan Estimate.
FHA MIPConventional PMI
Priced by credit scoreNo — same premium at 580 or 780Yes — steeply cheaper with high scores
Upfront premium1.75% (usually financed)None
Removal11 years (10%+ down) or refinanceCancellable at ~20% equity — no refinance needed
Minimum down payment3.5% (580+ score)3% (program-dependent)
Tends to win forBuilding credit, thin files, mid-600s scoresStrong credit, larger down payments

A buyer with a mid-600s score and 3.5%–5% down often finds the FHA package — rate plus MIP combined — produces a lower total monthly payment. A 740+ buyer usually prices better conventional — and if PMI is the sticking point, it’s worth weighing the lender-paid PMI tradeoff too. The right answer is a side-by-side your loan officer runs for you — both loans, real numbers, same day. That's exactly what we do at Valley West Mortgage: we shop multiple investors on both FHA and conventional pricing rather than fitting you to a single product.

See your real FHA vs. conventional numbers.

Get a personalized side-by-side — rate, MIP or PMI, and total monthly payment on both loans — from a Las Vegas mortgage lender licensed in 32+ states. No obligation.

Get your fast quote

Key terms in plain English

A few words on this page can sound technical. Here is the simple version.

MIP
Mortgage insurance premium — the fee every FHA borrower pays so the FHA can guarantee the loan.
UFMIP
Upfront MIP: the one-time 1.75% premium at closing, usually financed into the loan instead of paid in cash.
Annual MIP
The yearly premium (0.55% or 0.50% for most 30-year loans) divided into your monthly payment.
PMI
Private mortgage insurance — the conventional-loan equivalent, priced by credit score and cancellable at roughly 20% equity.
LTV
Loan-to-value: your loan balance as a percentage of the home's value. Under 80% LTV is the threshold for dropping mortgage insurance via a conventional refinance.

FHA mortgage insurance FAQ

How much is FHA mortgage insurance in 2026?

FHA charges a 1.75% upfront premium (usually financed into the loan) plus an annual MIP of 0.55% for most 30-year loans with minimum down payment, or 0.50% with at least 5% down. The annual premium is divided by 12 and added to the monthly payment.

Can FHA mortgage insurance be removed without refinancing?

Only if you put 10% or more down — in that case annual MIP ends automatically after 11 years. With less than 10% down, MIP lasts the life of the loan, and refinancing out of the FHA loan is the path to removing it.

Is the upfront 1.75% ever refunded?

Partially. If you refinance into another FHA loan within three years, HUD applies a prorated refund of your original upfront premium toward the new loan's UFMIP.

Does MIP change with my credit score?

No. FHA premiums are the same at 580 as at 780 — which is precisely why FHA tends to win for buyers still building credit, while conventional PMI rewards strong scores.

Is FHA MIP cheaper than it used to be?

Yes. Before March 2023 most FHA borrowers paid 0.85% annually. HUD cut the annual premium by 30 basis points, and the 0.55%/0.50% pricing remains in effect in 2026.

What's the FHA loan limit in Las Vegas for 2026?

The 2026 FHA limit for a one-unit home in Clark County is $541,287 (HUD). Above that, you'd be looking at conventional or other programs.

Can the 1.75% FHA upfront premium be paid in cash instead of financed?

Yes. HUD allows either route: finance the full UFMIP into the loan or pay it entirely in cash at closing — no partial splits. Financing it costs nothing out of pocket on closing day; paying cash keeps the loan balance about 1.75% smaller for the life of the loan.

How much of the FHA upfront premium comes back on an FHA-to-FHA refinance?

It depends on timing. HUD’s refund schedule starts at 80% of the original UFMIP in month one and falls two percentage points each month, reaching 10% in month 36. After three years there is no refund, and the credit only reduces the new loan’s upfront premium — it is never paid out as cash.

The bottom line

FHA mortgage insurance is the toll for the most forgiving mainstream loan program in America: 1.75% once, 0.55% a year, no credit-score penalty. For buyers with strong credit it's a reason to price conventional first; for everyone still building, it's often the cheapest total payment on the board — and a loan you refinance out of once equity does its work. Either way, the decision should be made on a same-day side-by-side, not a rule of thumb.

Two loans. Real numbers. Ten minutes.

Talk to a local Las Vegas loan officer and see FHA and conventional priced side by side for your exact scenario.

Start your fast quote
Reviewed by
Vatche Saatdjian
President, Valley West Mortgage · NMLS #65506

Las Vegas mortgage expert since 2004 · Equal Housing Opportunity. Valley West Mortgage is an independent mortgage lender operating in 32+ states and DC, with offices at 8010 W Sahara Ave Ste 140, Las Vegas, NV. This guide was reviewed for accuracy against current FHA and HUD guidance. Find a loan officer →

Sources

  1. HUD — Mortgagee Letter 2023-05: Reduction of FHA Annual Mortgage Insurance Premium rates (0.55%/0.50% schedule): hud.gov
  2. HUD — Single Family Housing Policy Handbook 4000.1, Section II.A.8 & Appendix 1.0 (UFMIP 175 bps; UFMIP refund schedule): hud.gov
  3. HUD — FHA Single Family Mortgage Insurance Premiums (UFMIP 1.75% & annual MIP schedule): hud.gov
  4. HUD — FHA Mortgage Limits (2026 Clark County one-unit $541,287): entp.hud.gov
  5. CFPB — What is mortgage insurance and how does it work: consumerfinance.gov

Across Valley West: Going FHA? FHAHomeLoans.services, our dedicated FHA site, covers rates, limits, and the application end to end.

Keep reading

Last updated: August 6, 2026 — added HUD’s UFMIP refund schedule and re-verified the 1.75% upfront premium against Handbook 4000.1 (rev. 11/26/2025); premium chart verified against HUD Mortgagee Letter 2023-05.

How to Remove PMI: The 80% Request, the 78% Automatic Drop, and the Appraisal Play

Mortgage Insurance

How to remove PMI: the 80% request, the 78% automatic drop, and the appraisal play

VWVS Written by Valley West Editorial · Reviewed by Vatche Saatdjian, NMLS #69363 (Valley West Mortgage, NMLS #65506) · Expert-reviewed
Updated July 17, 2026 · Originally published September 2015 · 6 min read

Valley West Mortgage is an independent mortgage lender, NMLS #65506. This article is editorial guidance; figures shown are illustrative examples — not a quote, offer, or commitment to lend.

Quick answer: Under the federal Homeowners Protection Act you can remove PMI by written request at 80% loan-to-value (original value), and your servicer must drop it automatically at 78% if you're current. The faster route in an appreciating market: a new appraisal — most servicers cancel at 75–80% of current value with a couple of years of seasoning.

PMI has a legal off-switch — most homeowners just never flip it. Here are the three removal paths, the exact requirements for each, and the appraisal math that gets Las Vegas homeowners out years early.

Key takeaways

  • Request at 80% LTV (original value): written request + clean payment history + no junior liens. Federal right under the Homeowners Protection Act.
  • Automatic at 78% on the original schedule (loan current) — and no later than the loan's midpoint regardless.
  • Appraisal route: most servicers cancel at 75–80% of current value with ~2–5 years seasoning — appreciation does the work instead of your payments.
  • LPMI can't be canceled — it lives in your rate; the exit is a refinance. (FHA loans follow different rules — see our MIP removal guide.)

Three ways to remove PMI

PMI removal paths under the Homeowners Protection Act and typical investor rules. Your servicer's written requirements govern your loan.
PathTriggerWhat you do
Borrower request80% LTV, original valueWritten request + payment history check
Automatic termination78% LTV on original schedule (loan current) — or loan midpointNothing — but don't wait for it
Current-value appraisal~75–80% of today's value, ~2–5 yrs seasoningOrder servicer-approved appraisal (~$500–$600)

When can you request PMI cancellation?

  • LTV at or below 80% of the original value (purchase price or original appraisal, whichever governs your loan)
  • Payment history: no 30-day lates in the past 12 months, no 60-day lates in the past 24
  • Current on the loan, and no junior liens (a HELOC can block cancellation)
  • Possibly evidence value hasn't declined — the servicer tells you what they'll accept

You can reach 80% faster by making extra principal payments — even one lump payment to cross the line can justify the request letter the same month.

The appraisal play: let appreciation do the work

Worked example — illustrative only

Bought at $400,000 in 2023 with 10% down ($360,000 loan). Balance today ≈ $342,000.

Original-value LTV: $342,000 ÷ $400,000 = 85.5% — not there yet

If the home appraises at $460,000: $342,000 ÷ $460,000 = 74.3% — under the 75% current-value bar

A ~$550 appraisal vs. PMI at, say, $150/month: the appraisal pays for itself in under four months, then saves $1,800/year.

Valley West takeCall your servicer first, appraiser second. Servicers only accept appraisals they order or approve — a $550 appraisal you commissioned yourself is usually worthless to them. Ask for their PMI-deletion requirements in writing, follow their process exactly, and if they stonewall past the HPA thresholds, that's a complaint to the CFPB. And if your rate is also above market, compare the appraisal route against a straight refinance — sometimes one move solves both. The refinance side of that decision is mapped in the conventional loan path in Las Vegas.

When can PMI not be canceled?

  • LPMI (lender-paid MI): baked into your rate permanently — the exit is a refinance.
  • FHA loans: different rules entirely — MIP with under 10% down lasts the life of the loan; see the FHA MIP removal guide.
  • Recent lates or a junior lien: fix the history or subordination issue first, then request.

Paying PMI you might not owe?

We'll estimate your current LTV against Las Vegas comps, tell you which removal path fits, and check whether a refinance beats them all. No obligation.

Get your fast quote

PMI removal FAQ

When can I remove PMI?

Request it at 80% LTV of original value; it must drop automatically at 78% if you're current. Many servicers also cancel at 75–80% of current value with a new appraisal and ~2–5 years of seasoning.

Does PMI ever drop off on its own?

Yes — at 78% LTV on the original amortization schedule, and no later than the loan's midpoint. But waiting for automatic termination usually costs you months of unnecessary premiums.

Can I use a new appraisal?

Usually — through your servicer's process, with an appraisal they order or approve. Typical bar: 75–80% of current value depending on seasoning.

What blocks a cancellation request?

Late payments in the last 12–24 months, a junior lien like a HELOC, or a value decline. Fix the blocker, then re-request.

Can LPMI be canceled?

No — lender-paid MI is priced into your rate for the life of the loan. The exit is a refinance.

The bottom line

PMI is supposed to be temporary — federal law guarantees it. Know your two numbers (balance and value), pick the cheapest path across the line, and put the request in writing the month you qualify. In a market that's appreciated like Las Vegas, the appraisal route gets most people out years before the amortization schedule would.

Reviewed by
Vatche Saatdjian
President, Valley West Mortgage · NMLS #65506

Las Vegas mortgage expert since 2004 · Equal Housing Opportunity. Valley West Mortgage is an independent mortgage lender operating in 32+ states and DC, with offices at 8010 W Sahara Ave Ste 140, Las Vegas, NV. Find a loan officer →

Sources

  1. CFPB — When can I remove private mortgage insurance (PMI) from my loan: consumerfinance.gov
  2. Homeowners Protection Act of 1998 (12 U.S.C. §4901 et seq.) — cancellation and automatic-termination rights: congress.gov
  3. Fannie Mae Servicing Guide — B-8.1-04, Termination of Conventional Mortgage Insurance: servicing-guide.fanniemae.com

Across Valley West: If a conventional refinance is the road out of PMI, our conventional loan site is built for exactly that.

Keep reading

Last updated: July 17, 2026 — fully rewritten from the 2015 original; HPA rights, current-value appraisal route, and worked LTV math added; sourced to CFPB and Fannie Mae.

How to Remove FHA Mortgage Insurance (MIP) in 2026

FHA Guides

How to remove FHA mortgage insurance (MIP) in 2026, and when you get a UFMIP refund

VWVS Written by Valley West Editorial · Reviewed by Vatche Saatdjian, NMLS #69363 (Valley West Mortgage, NMLS #65506) · Expert-reviewed
Updated July 17, 2026 · Originally published February 2023 · 6 min read

Valley West Mortgage is an independent mortgage lender, NMLS #65506, not affiliated with or endorsed by HUD or the FHA. Figures are illustrative — not a quote, offer, or commitment to lend.

Quick answer: To remove FHA mortgage insurance, you have three paths: automatic removal after 11 years if you put 10% or more down, refinancing into a conventional loan once your balance is at or below ~80% of your home's value, or paying off the loan. With less than 10% down, today's FHA MIP otherwise lasts the life of the loan.

FHA gets you in the door — MIP is the rent you pay until you leave. Here's exactly when MIP drops off on its own, when refinancing wins, what the math looks like, and the refund rule that applies if you go FHA-to-FHA. (For what MIP costs in the first place, start with our complete FHA mortgage insurance guide.)

Key takeaways

  • 10%+ down: annual MIP cancels automatically after 11 years. Less than 10% down: it runs the life of the loan — no request removes it.
  • The main exit is a conventional refinance at ~80% LTV — no mortgage insurance at all, and Las Vegas appreciation often gets borrowers there faster than the amortization schedule does.
  • Refinance FHA-to-FHA within 3 years and HUD credits a prorated refund of your upfront premium toward the new loan.
  • Older loans (before June 3, 2013) follow legacy rules: MIP can cancel at 78% LTV after 5+ years.
  • FHAFHA loans in Las Vegas: requirements and limitsDown payment, credit floor, and the 2026 Clark County picture.

Three ways to remove FHA mortgage insurance

FHA MIP removal paths for loans originated June 3, 2013 or later. Illustrative — your dates and figures are confirmed by your servicer and Loan Estimate.
PathRequirementWhat you end up with
Automatic cancellation10%+ original down payment, 11 years of paymentsSame FHA loan, no annual MIP
Conventional refinance~80% LTV or better on current valueNew loan, no mortgage insurance
Payoff or saleLoan paid in fullDone — MIP ends with the loan

When does MIP cancel automatically?

The dividing line is your original down payment. Put 10% or more down and annual MIP ends automatically after 11 years — no request, no appraisal. Put less than 10% down (the typical 3.5% FHA buyer) and MIP is attached for the life of the loan: your servicer cannot remove it no matter how much equity you build. That's not a mistake on your statement; it's the rule for all FHA loans originated since June 3, 2013.

“The premium will be reduced from 0.85 percent to 0.55 percent for most homebuyers seeking an FHA-insured mortgage.”U.S. Department of Housing and Urban Development “HUD No. 23-041,” March 2023 — hud.gov

If your loan is older than June 3, 2013, legacy rules apply: annual MIP cancels once you reach 78% LTV on the original amortization schedule with at least 5 years of payments. If that's you, call your servicer — some legacy borrowers are still paying MIP they could have dropped.

The refinance exit: how most people actually drop MIP

Once your balance is at or below roughly 80% of your home's current value, a conventional refinance carries no mortgage insurance at all. The equity math has two engines — your payments and your home's appreciation — and in most Las Vegas neighborhoods, appreciation does the heavy lifting.

Worked example — illustrative only

Bought at $420,000 with 3.5% down in 2023; loan balance now ≈ $390,000.

If the home now appraises at $490,000: $390,000 ÷ $490,000 = ≈ 80% LTV — conventional refinance, no MI

MIP saved at 0.55%: ≈ $179/month — about $2,150/year

Whether the refinance wins overall depends on how your new conventional rate compares to your FHA rate — that's the side-by-side we run. Check today's rates.

Valley West takeDon't wait for exactly 80%. Between 80% and 95% LTV, a conventional refinance with credit-priced PMI can still beat FHA MIP for strong-credit borrowers — PMI at 740+ is often far cheaper than 0.55% flat, and it cancels at 20% equity without another refinance. The trigger to call us isn't an LTV number; it's your credit score improving since you closed FHA. That's when the math moves.

Do you get a UFMIP refund when you refinance?

If you refinance into another FHA loan within 3 years of closing, HUD credits a prorated refund of the 1.75% upfront premium you already paid toward the new loan's upfront premium. It is a credit against the new upfront premium, not a check in the mail. Refinancing to conventional does not come with a UFMIP refund; the trade is that you're leaving mortgage insurance behind entirely.

The credit starts at 80% in month one and drops two points for every month you have held the loan. One correction worth making here, because it talks people out of money they are owed: the refund does not fall to zero at month 36. Month 36 is still worth 10%. Month 37 is the one that pays nothing.

FHA UFMIP refund chart: what you get back, by month

Upfront Mortgage Insurance Premium Refund Percentages, reproduced from HUD Handbook 4000.1, section II.A.8, page 416 (last revised 08/14/2019). Columns are the month within that year of your loan. The percentage applies to the upfront premium you originally paid, and HUD credits it against the upfront premium on the new FHA loan. Valley West Mortgage is not affiliated with or endorsed by HUD or the FHA.
Year123456789101112
Year 1 (months 1 to 12)80%78%76%74%72%70%68%66%64%62%60%58%
Year 2 (months 13 to 24)56%54%52%50%48%46%44%42%40%38%36%34%
Year 3 (months 25 to 36)32%30%28%26%24%22%20%18%16%14%12%10%

What that is worth, as an illustrative example. On a $400,000 base loan amount the 1.75% upfront premium is $7,000. Refinance FHA to FHA in month 14 and the chart reads 54%, so $3,780 comes off the upfront premium on the new loan. Wait until month 30 and the same refinance is worth 22%, or $1,540. Your own numbers come off your closing documents and the Loan Estimate for the new loan, and only an FHA to FHA refinance qualifies.

Find out if you can drop MIP this year.

We'll estimate your current LTV, price the conventional refinance against your FHA loan, and tell you plainly whether the math works now or what it needs to work later. No obligation.

Get your fast quote

MIP removal FAQ

How do I remove FHA mortgage insurance?

Automatic cancellation after 11 years (10%+ down only), a conventional refinance at ~80% LTV, or paying off the loan. With less than 10% down, today's FHA MIP otherwise lasts the life of the loan.

Can my servicer remove MIP if I request it?

No — for FHA loans since June 3, 2013 with under 10% down, there is no request-based removal. The refinance is the exit.

My loan is from before June 2013 — different rules?

Yes. Legacy loans can cancel MIP at 78% LTV on the original schedule after at least 5 years. Call your servicer and ask where you stand.

Do I get upfront premium money back when I refinance?

Only FHA-to-FHA within 3 years: HUD prorates a refund of your original 1.75% toward the new loan's UFMIP. Conventional refinances get no refund.

How much does dropping MIP save?

Roughly $183/month on a $400,000 balance at the 0.55% rate — about $2,200 a year, as an illustrative example. Your actual savings depend on your balance and new rate.

The bottom line

MIP is the price of FHA's easy entry, not a life sentence. Know your lane: 10%+ down borrowers just wait out the 11 years; everyone else watches two numbers — home value and credit score — and refinances when they line up. Have us run the check once a year; it costs nothing and the month the math flips is worth catching.

Reviewed by
Vatche Saatdjian
President, Valley West Mortgage · NMLS #65506

Las Vegas mortgage expert since 2004 · Equal Housing Opportunity. Valley West Mortgage is an independent mortgage lender operating in 32+ states and DC, with offices at 8010 W Sahara Ave Ste 140, Las Vegas, NV. Not affiliated with or endorsed by HUD or the FHA. Find a loan officer →

Sources

  1. HUD — FHA Single Family Housing Policy Handbook 4000.1, Annual MIP duration table: hud.gov
  2. HUD — Mortgagee Letter 2013-04 (MIP duration for loans on/after June 3, 2013): hud.gov
  3. HUD — UFMIP refund schedule (FHA-to-FHA refinances within 3 years): entp.hud.gov

Across Valley West: Weighing the refinance exit? Start on our FHA loan site or price the conventional side at ConventionalHomeLoans.services.

Keep reading

Last updated: July 17, 2026 — repurposed from the February 2023 pricing-update announcement into the MIP-removal guide; rules verified against HUD Handbook 4000.1.

More Pros with the Rate Hikes

Our last few articles have been on the impact that the oncoming rise in interest rates from the Federal Reserve will have on the general public, and more specifically how it will impact those who are in the market for purchasing and refinancing. Janet Yellen has openly stated that a change from the Fed is coming soon due to the growth in our economy. We’ve mentioned both the pros and the cons of an interest rate hike, but lately we’ve been noticing more pros for our borrowers than cons.

One positive impact that this rise in interest rates can have on our current and potential borrowers is the opportunity to free themselves from Mortgage Insurance Premiums. Your Mortgage Insurance Premium is the price that you pay monthly as a part of your mortgage payment that goes into an account to protect your lender if you fall on hard times and happen to default on your loan. A Mortgage Insurance Premium or MIP for short, is usually only required for borrowers who can’t afford to put down 20% of their loan amount when applying for their mortgage loan. Up until January 2013, borrowers were able to cancel their MIP coverage once they had made enough payments and had 20% equity in their home. Now that policies have changed, borrowers no longer have the option of cancelling the MIP on their loan when they reach 20% equity.

However, being the mortgage monsters that we are here at Valley West Mortgage, we’ve recognized a way that borrowers can still break away from the bondage of MIP. With a refinance into a Conventional loan where the requirements are somewhat different than an FHA loan, borrowers can drop their MIP payment (provided they meet the aforementioned requirements).

Borrowers who used the FHA program to purchase their home who have been making regular mortgage payments have been building up equity since the day they made the first payment. Couple that with the fact that the average prices of homes around the United States has gone up in the last 2-3 years and just like that, we’ve found another reason for you to refinance into a Conventional loan. Having equity or monetary value in your home means that you can apply for a Cash-Out refinance. Thinking of going on a vacation? Have a kid going to college? Or maybe you just want to do some home improvement? A Cash Out Refinance would give you the opportunity to refinance your old loan into a new one and get cash back for some of the value that your home holds.

In 2016 about 8% of all the refinances processed were for borrowers who were switching from an FHA loan program to a Conventional loan program. That calculates to about 20,000 of those refinances per month in 2016. With the growth of our economy, it is estimated that the prices of homes will go up by about 5% (according to data found by CoreLogic). Considering the fact that over 2 million borrowers purchased homes using the FHA program in recent years, there is no doubt going to be a large wave of refinances coming from borrowers who wish to refinance in 2017.

 

 

 

 

 

When doing your research, always use great sources! Check out the sources for this article below.

http://www.corelogic.com/blog/authors/sam-khater/2017/03/fha-to-conventional-refinancing-is-a-bright-spot-in-the-mortgage-market.aspx#.WMLlk2_yu72

http://themortgagereports.com/16451/refinance-fha-mortgage-rates-streamline-refinance

 

WHITNEY RUSH, VALLEY WEST MORTGAGE


FHA Lowers Cost of Mortgage Insurance Premiums, Possibly.

President Barack Obama announced on Wednesday that the Federal Housing Administration (FHA) annual insurance premiums will lower to 0.85 from 1.35, according to an article published by CNBC. This move is said to expand responsible credit borrowing to qualified lenders, according to the article, and is an effort to bring more first-time home buyers into the current market.

Mortgage issuers stocks also fell on Wednesday, according to the report, while home builder’s stocks across the nation rose. Julian Castro, Secretary of the U.S. Department of Housing and Home Development, believes that this move will increase the affordability of American homes over the next few years. He said that taking the premiums down for American citizens will improve opportunities and strengthen financial outcomes. He sees this as a step to reduce risks in the mortgage department and help protect consumers.

According to the article, the reduction in premiums could mean a savings of around $80 a month for a first time applicant to the FHA. In addition, Freddie Mac and Fannie Mae (two federally sponsored second-party mortgagers) announced recently a new 3 percent down payment option requiring private mortgage insurance. This, of course, is for qualified lenders, meaning those in very good credit standing. However, it does compete directly with the FHA, which offers down payment options at a 3.5 percent minimum.

The FHA has been working on building its capital reserves back up, according to the article, and because it is not in the clear yet, some people believe that the decision to make cuts could receive some criticism. To be out of the black, its capital reserves must meet a 2 percent minimum.

“Lowering the premium will bring volume back to the FHA,” said Diana Olick, real estate reporter for CNBC. “But it will also bring back risk.”

Among all the risks, the article reports that the White House administration is clearly looking for ways to increase homeownership by making the process and implementation of a mortgage less reckless for buyers. President Obama is expected to address all this and more on Thursday in Phoenix, where he will give a speech on the improvements in the housing market as well as future plans.

Read the full CNBC Article



What is Personal Mortgage Insurance (PMI)?

While the housing market continues to stabilize across the United States, there’s no guarantee that everyone in need of home financing will have a large down payment. However, you shouldn’t let that stop you from obtaining the mortgage you need for the home you love.

If you can still offer a down payment on your dream home, yet less than 20 percent of the appraisal value of the home, you will be required to obtain personal mortgage insurance (PMI). Personal – or private – mortgage insurance is a policy that protects the lender in the event of a client’s default.

PMI differs from government mortgage insurance in that not everyone will be required to obtain a PMI; however, it can’t hurt to sign up for it regardless. Private companies facilitate PMI’s and act as the beneficiary, while you (the borrower) pays the premium. The rates for a PMI vary depending on how much you borrow and how much you are able to offer as a down payment. Typically, rates for a PMI don’t reach above 2 percent. For example, say you buy a $200,000 house and are able to make a 15 percent down payment. You have to borrow $170,000, with a PMI rate of 0.56 percent. If you multiply your loan amount by the premium (0.0056), that makes your annual premium $952, or a monthly payment of $79.33.

If you are a borrower that needs to obtain or is interested in a PMI, please contact us for further questions and details.


Mortgage Insurance Policy Changes

The Federal Housing Administration (FHA) is changing up-front and monthly Mortgage Insurance (MI) on FHA case numbers dated October 4, 2010 or later. Currently the up-front fee is charged at 2.25% and the monthly fee is based on term and LTV. The up-front fee is being reduced to 1%. The monthly fee is being increased. The matrix below gives the full breakdown:

Upfront Mortgage Insurance Premium (MI)



FHA - Mortgage Insurance Premium Update...

Implementation of the new plan is delayed until October 1st.

After announcing last week that it was lowering upfront insurance premiums
from 2.25% to 1.0% on Sept. 7, the Federal Housing Administration said it’s pushing back implementation until October.
“Based on industry feedback and our desire to have this change implemented successfully in the marketplace, FHA will make the premium fee changes on all new case numbers effective October 4, 2010,” said Vicki Bott, Deputy Assistant Secretary for the Housing and Urban Development.

For details on the upcoming changes, see our earlier post, "Congress has passed H.R. 5981 – FHA Mortgage Insurance Changes…" Posted on August 5th, 2010



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