Mortgage insurance premium
The FHA equivalent of PMI. Includes an upfront charge and a monthly one. Unlike PMI, it usually stays for the life of the loan.
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Part 1 of 4
Why a seller cares
MIP is the FHA buyer's mortgage insurance, and it is part of the payment they qualified for. It matters to a seller only in one way: an FHA buyer's monthly cost is a little higher, which is already baked into their approval.
Part 2 of 4
A simple example
An FHA buyer on a $290,000 loan pays an upfront premium rolled into the loan and about $130 a month in MIP.
| The charge | Who pays, when |
|---|---|
| Upfront MIP | The buyer, financed into the loan at closing |
| Monthly MIP | The buyer, with the mortgage payment, for most of the loan's life |
| Anything from the seller | Nothing; it is the buyer's loan cost |
MIP is the price of a 3.5% down payment, and it is the buyer's.
Part 3 of 4
What people get wrong
That MIP is the same as PMI. PMI drops off with equity; FHA's MIP usually stays for the life of the loan.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
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