How much is FHA mortgage insurance?

Two premiums. The upfront one is 1.75% of the base loan and is almost always financed into the mortgage rather than paid at closing. The annual one is 0.55% where the deposit is under five percent and 0.50% at five percent or more, for typical loan sizes, charged monthly. On a $386,000 loan that is about $180 a month at the start, falling gradually as the balance does.

Does FHA mortgage insurance ever go away?

It depends entirely on one number at origination. Where the loan-to-value is above ninety percent on a term over fifteen years, the premium runs for the life of the loan and there is no cancellation mechanism at all. At ninety percent or below it stops after eleven years. That is decided the day you close and cannot be changed afterwards by paying down the balance or by the house appreciating — the only exit from a life-of-loan premium is refinancing into a conventional mortgage.

Why does ten percent down matter so much?

Because it is exactly where the duration rule flips, and the rule is a step rather than a slope. On a $400,000 house, 9.99% down means insurance for thirty years costing $42,157. Ten percent means insurance for eleven years costing $24,902. The difference in cash is forty dollars and the difference in cost is $17,255. Anyone who has saved eight or nine percent should look very hard at whether the last one percent is reachable, because no other dollar in the transaction works that hard.

Is FHA or conventional better?

It turns on your credit score and your deposit. FHA accepts weaker credit and smaller deposits and often quotes a lower interest rate, which is a real advantage. Against that, its insurance is dearer and frequently permanent, while conventional insurance cancels at eighty percent and terminates automatically at seventy-eight. A common pattern is to buy with FHA because it is what you can qualify for, then refinance to conventional once you have twenty percent equity — which works, but depends on rates being tolerable when you get there.

What credit score do I need for an FHA loan?

Five hundred and eighty for the 3.5% deposit, and five hundred to five hundred and seventy-nine with ten percent down. Lenders routinely impose their own higher minimums on top, so a published floor of 580 does not guarantee anyone will actually lend at it. There is an odd consolation in the lower tier: a borrower forced to put ten percent down by a weak score lands on the good side of the eleven-year rule, while a stronger borrower putting 3.5% down pays the premium for thirty years.

What are the FHA loan limits?

For 2026 they run from a floor of $541,288 in most counties to a ceiling of $1,249,125 in the highest-cost areas, with figures in between set county by county. The floor is 65% of the conforming loan limit and the ceiling is 150% of it, so both move when the conforming limit does. If your purchase needs a larger loan than your county allows, FHA is simply not available and the conversation moves to conventional or jumbo lending.

Can I refinance out of FHA mortgage insurance?

Yes, and for anyone carrying a life-of-loan premium it is usually the plan from the outset. Refinancing into a conventional loan at eighty percent equity removes the premium entirely. What it costs is closing fees of several thousand dollars, and what it risks is that rates when you get there are worse than the rate you have. Note also that an FHA streamline refinance does not help with this — it keeps you inside the FHA programme and the premium continues.

Can I avoid the upfront premium?

No. It applies to every FHA loan regardless of deposit, credit or loan size. What you can choose is whether to pay it at closing or finance it, and almost everyone finances it — which means borrowing $6,755 on a $386,000 loan and paying interest on it for thirty years. There is one narrow refund: refinancing into another FHA loan within three years attracts a partial rebate of the original upfront premium, on a sliding scale that shrinks with each month.

Is FHA mortgage insurance tax deductible?

Do not count on it. The deduction for qualified mortgage insurance premiums lapsed and has been revived by Congress several times, so its status has changed repeatedly and sources contradict each other on whether it currently applies. Even when available it only helps those who itemise, which most households do not. Treat any deduction as a possible bonus to confirm with a tax professional rather than a figure to build into your budget.

What else does an FHA loan require?

The property has to meet minimum standards, and this catches people out on older houses. An FHA appraiser checks condition as well as value, and problems such as peeling paint on a pre-1978 property, a failing roof, missing handrails or defective systems have to be fixed before closing, sometimes by a seller who would rather not. The house must also be your principal residence — FHA does not finance investment property. Ratios are more generous than conventional, reaching well past fifty percent of income with automated approval.

FHA Loan Calculator

There is a cliff in the FHA rules at exactly ten percent down, and it is worth more than almost any other decision in the transaction. Mortgage insurance on an FHA loan runs for the life of the loan where the loan-to-value is above ninety percent, and stops after eleven years where it is ninety or ...

THE PURCHASE

PURCHASE PRICE ($)

DEPOSIT (%)

RATE (%)

TERM (YRS)

CREDIT SCORE

INSURANCE OVER THE WHOLE LOAN

$49,040

$6,755 upfront, financed into the loan, plus 0.55% a year running for the entire 30 years, because the loan-to-value of 96.5% is above ninety percent.

UPFRONT

$6,755

MONTH ONE

$180.01

RUNS FOR

30 years

$26,000 more deposit would save $24,138 of insurance. Ten percent down puts the loan-to-value at exactly ninety, which is the line where the premium stops after eleven years instead of running the full term. It is a step, not a slope — a deposit of 9.9% is on the wrong side of it, and the difference between the two is a few hundred dollars of cash and roughly nineteen years of premiums.

You borrow more than the house costs. The upfront premium of $6,755 is added to the loan rather than paid at closing, so a $400,000 purchase with $14,000 down produces a $392,755 mortgage — 98.2% of the price. That financed premium then accrues interest for the whole term, which is a cost the headline rate does not show.

Purchase price

$400,000

Deposit

$14,000

Base loan

$386,000

Loan-to-value

96.50%

Upfront premium, 1.75%

$6,755

Total borrowed

$392,755

Principal and interest

$2,482.48

Insurance, month one

$180.01

Annual premium rate

0.55%

Premium runs for

30 years

Annual premiums total

$42,285

All insurance

$49,040

A note on how this is calculated. The annual premium is charged on the average balance for each year and recalculated annually, so it falls as the loan amortises. Many calculators apply the rate to the original loan for the whole term, which overstates a thirty-year premium substantially. The figures here use the declining basis, which is why they may look lower than elsewhere. This is still an estimate rather than a quote.

THE INSURANCE

That vertical drop is the whole decision. Everywhere else on the curve, more deposit reduces the insurance gently, because the premium is a percentage of a smaller loan. At exactly ten percent the duration rule flips and the cost falls off a cliff. It is the only place in this category where a few hundred dollars of deposit is worth tens of thousands.

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HOW TO USE

1
Enter the price and the deposit you have in mind. If it lands anywhere between five and ten percent, move it to exactly ten and watch the total insurance figure — that step is the most valuable thing on the page.
2
Set your credit score honestly. Below 580 the minimum deposit is ten percent rather than 3.5%, which rules out the low-deposit route but does put you on the better side of the duration rule.
3
Note that the total borrowed is more than the price less your deposit. The upfront premium is added to the loan, and it accrues interest like everything else.
4
Open the conventional comparison if your deposit is under twenty percent. FHA insurance is usually dearer over time but the interest rate is often lower, so the two partly offset.

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Last updated: July 31, 2026 · Premiums per current FHA rates · Annual premium calculated on the declining balance · Estimate only, not a quote.