When Does FHA Mortgage Insurance Go Away? The 11-Year Rule, the Refinance Exit, and the Math

Short Answer: It Does Not Fall Off on Its Own — Unless You Put 10% Down

If you put less than 10% down on an FHA loan, your annual mortgage insurance premium — MIP — lasts for the life of the loan. It does not fall off at 20% equity. It does not fall off at 50% equity. Paying extra principal does not remove it, and a higher home value does not remove it. The only ways it ends are paying the loan off or refinancing into a non-FHA loan. If you put 10% or more down, the rule is different: MIP drops off automatically after 11 years. That one line — your down payment on the day you closed — decides whether you pay MIP for 11 years or 30. On a $300,000 Jacksonville home with 3.5% down, that is $132.69 a month at the start and about $29,400 over the life of the loan. This post shows the rule, the math, and the one exit that actually works.

The Two Premiums You Are Paying

Every FHA loan carries two separate mortgage insurance charges, and confusing them is where most of the bad advice starts. The first is the upfront mortgage insurance premium, or UFMIP: 1.75% of the base loan amount, charged once at closing and usually financed into the loan rather than paid in cash. On a $289,500 base loan, that is $5,066.25 added to the balance on day one. The second is the annual MIP, billed monthly inside your mortgage payment. For most 30-year FHA loans it is 0.55% of the loan balance per year if you put less than 5% down, and 0.50% if you put 5% or more down. Those rates come from HUD Mortgagee Letter 2023-05, which cut annual MIP from 0.85% to 0.55% for loans endorsed on or after March 20, 2023 — and HUD has not changed them since. (Sources: HUD Handbook 4000.1, Appendix 1.0; HUD Mortgagee Letter 2023-05.)

Here is the part that surprises nearly every FHA borrower I talk to: the upfront premium is a one-time charge, but the annual premium is the one that compounds into real money. At 0.55% a year, a $289,500 loan costs $132.69 a month in MIP in the first year — roughly a car insurance payment, every month, for as long as the rule says it lasts. And the rule says how long based on one thing only: your down payment.

The Duration Rule: Your Original Down Payment Decides Everything

For FHA case numbers assigned on or after June 3, 2013, HUD's rule — Mortgagee Letter 2013-04, now in Handbook 4000.1 — sets how long annual MIP is charged based on your original loan-to-value ratio, the LTV on the day you closed:

Down payment of 10% or more (original LTV of 90% or less): annual MIP is charged for 11 years, then stops automatically.

Down payment under 10% (original LTV above 90%): annual MIP is charged for the life of the loan — on a 30-year mortgage, that is 30 years of premiums.

Two details in that rule do most of the damage. First, it is your original LTV that counts. Building equity afterward — by paying the balance down, by making extra principal payments, or by your home appreciating — does not change the duration. HUD's own guidance is explicit: borrowers may not request early cancellation of annual MIP based on prepayment of principal. Second, the 11-year cancellation is automatic, but only if you were not more than 30 days late on a payment in the 12 months before the cancellation date.

That is the sharpest difference between FHA insurance and conventional private mortgage insurance, and it is the comparison that matters. On a conventional loan, federal law — the Homeowners Protection Act of 1998 — lets you request PMI cancellation in writing once your balance reaches 80% of the home's original value, and requires your servicer to terminate it automatically once the balance is scheduled to reach 78%. FHA MIP has no equivalent. The HPA does not apply to FHA loans at all. (Source: 12 U.S.C. 4902; Consumer Financial Protection Bureau, Homeowners Protection Act guidance.)

The number that decides how long you pay MIP was set on closing day — not by your equity today.

The Math on a $300,000 Jacksonville Home

Take the home most Jacksonville buyers are actually looking at. Realtor.com's October 2026 figures put the median Jacksonville listing at $294,750, so a $300,000 purchase is right in the middle of the market. Run it two ways — the minimum 3.5% down that draws most first-time buyers to FHA, and the 10% down that changes the MIP rule — at the Freddie Mac national average of 7.18% for a 30-year fixed loan for the week ending November 5, 2026. That 7.18% is a conventional-loan average, not an FHA rate, but it is the right benchmark for comparison math.

With 3.5% down: base loan $289,500. UFMIP at 1.75% adds $5,066.25, for a total loan of $294,566.25. Principal and interest at 7.18% is $1,995.49 a month. Annual MIP at 0.55% starts at $132.69 a month. Because MIP is charged on the declining balance, it steps down slightly each year — but it never stops. Over 30 years, the total MIP paid comes to about $29,400.

With 10% down: base loan $270,000. UFMIP at 1.75% adds $4,725, for a total loan of $274,725. Principal and interest at 7.18% is $1,861.08 a month. Annual MIP at 0.50% starts at $112.50 a month — and it stops after 11 years. Total MIP paid over those 11 years comes to about $13,672.

The difference between the two down payments is $15,769.85 in mortgage insurance alone — before counting the lower loan balance and the lower monthly payment. That is the real price of the minimum down payment, and it is a price almost nobody shows a buyer at the closing table.

The Three Exits — and the Only One That Works for Most Borrowers

There are exactly three ways annual MIP ends. The first is waiting out the 11 years — but that exit only exists if you put 10% or more down in the first place. If you put 3.5% down, there is no waiting period. The second is paying the loan off in full, which ends MIP because there is no loan left to insure. The third is refinancing into a non-FHA loan, which is the exit that actually applies to the typical FHA borrower — and it is the one worth running the numbers on, because it is the only exit you control.

Two supposed exits do not work and need to be named plainly. Paying extra principal does not shorten MIP, because duration is set by your original LTV, not your current balance. And an FHA Streamline refinance does not remove MIP either — a streamline can lower your rate without an appraisal or income verification, but the new loan is still FHA-insured and the annual MIP comes with it. If someone tells you a streamline will get rid of your MIP, they are wrong on the rule. (Source: HUD Handbook 4000.1, Section II.A.8.)

Refinancing out of FHA is the exit you control. The streamline is not an exit — it keeps the MIP.

The Refinance Exit, Worked: Year Five on a $300,000 Home

Here is what the exit looks like on the same $300,000 purchase, five years in. The loan balance after five years of payments is about $277,807. Suppose the home is now worth $350,000 — modest appreciation in a Jacksonville market where the median listing is already $294,750. That puts the loan-to-value at 79.4%, just under the 80% line. Refinancing that $277,807 balance into a conventional loan at the same 7.18% benchmark rate gives a new principal-and-interest payment of $1,881.96 a month — and no PMI, because the loan is at 80% LTV or below.

Compare that to staying put. The old FHA payment in year five is about $2,122.82 a month — $1,995.49 of principal and interest plus about $127.33 of MIP. The refinance saves about $240.86 a month, and every dollar of it is the MIP coming off plus the slightly smaller balance. Even if you count only the MIP itself — $127.33 a month in year five — $4,500 of refinance costs divided by $127.33 is a 35.3-month break-even. After that, the saving is yours every month for the rest of the loan. And if the new conventional rate is lower than your FHA rate, the saving is larger still.

One caution, because it decides whether the exit is real: if your equity is under 20% when you refinance into conventional, the new loan carries PMI — but conventional PMI is a different animal. Under the Homeowners Protection Act you can request cancellation at 80% of the home's original value, and your servicer must terminate it automatically at 78%. Conventional PMI has an exit written into federal law. FHA MIP, for the 3.5%-down borrower, does not. That is the whole argument for refinancing out: you are trading an insurance charge with no exit for one with two exits.

Run the division before you sign anything. Refinance costs divided by monthly MIP saved is your break-even in months. If you will stay in the home past that date, the refinance pays for itself. If you will move before it, it does not. The math — not the sales pitch — is the decision.

The Jacksonville Angle

This is not an abstract problem in Jacksonville. The 2026 FHA loan limit for a one-unit home in Duval County is $580,750, which covers nearly every home a first-time buyer looks at here — and the buyers using FHA are overwhelmingly putting 3.5% down, which is exactly the down payment that triggers life-of-loan MIP. Five years of normal payments and normal appreciation put that borrower right at the refinance exit: under 80% LTV, no PMI on the new loan, and roughly $240 a month back. The borrowers who never run that division keep paying $127-plus a month for insurance they no longer need — for decades.

Jacksonville's median home is $294,750. At 3.5% down, the MIP on it has no end date — until you refinance out.

What Not to Do

Do not pay extra principal expecting your MIP to drop — it will not, and the money is better held for the refinance costs that actually end the charge. Do not count on HUD changing the rule — the life-of-loan structure has stood since 2013, and no change has been announced. Do not take a streamline refinance expecting it to remove MIP — it lowers the rate, not the insurance. And do not assume your servicer will tell you when you qualify for the refinance exit. Nobody calls you to say your equity crossed 80%. You have to check the number yourself, or have someone check it for you.

The broader point is the one this blog keeps coming back to: the actual FHA guideline is the starting point, not any one lender's overlay. FHA's real rules — 3.5% down at a 580 credit score, the MIP durations in this post — are more borrower-friendly than the bank version most people hear. But the MIP duration rule is the one place where the actual guideline is harsher than the folk wisdom. The guideline says life of the loan. Believe the guideline, not the rumor — and then use the refinance exit it leaves open. With 200 lenders to choose from, the right next loan is a pricing question, not a permission question.

Did your lender tell you your FHA mortgage insurance would fall off at 20% equity — and how many years of MIP have you already paid past the point where a refinance would have ended it?

Your Next Step

1. Check Your Rate — Free: See what rate you actually qualify for across 200+ lenders — free, no credit check, no pressure.

2. Run your refinance number: Use the refinance quiz with your current balance, your home's value, and your current rate — then divide the costs by the MIP you would stop paying.

3. Prefer to talk it through? Call Douglas direct: (904) 517-4049.

Douglas Wilkerson — NMLS #1680719
Direct: (904) 517-4049
[email protected] | [email protected]
1548 the Greens Way, Ste. 4, Jacksonville Beach, FL 32250

Freeman Douglas Corporation is a DBA of Edge Home Finance. This is not a promise to lend — all credit decisions are subject to approval. Douglas Wilkerson, NMLS #1680719 | Edge Home Finance, NMLS #891464. Verify licensing at nmlsconsumeraccess.org. Equal Housing Opportunity.