Mortgage insurance and upfront fees explained
Mortgage insurance protects the lender, not the borrower, if a loan isn’t repaid. Each program handles it differently: some charge a monthly premium, some a one-time fee, some both.
Conventional: private mortgage insurance (PMI)
PMI is priced by private mortgage insurance companies, so there is no single published rate. Ask your lender for a PMI figure and type it into the calculators.
The premium can be paid monthly, partly or fully at closing (split or single premium), or by the lender, so a conventional loan can have mortgage insurance costs at closing. See upfront costs on conventional loans.
Source: Fannie Mae Selling Guide B7-1-01, Provision of Mortgage Insurance (04/02/2025); Freddie Mac Single-Family Seller/Servicer Guide, Section 4701.2, Mortgage insurance premiums (effective 02/04/2026) · checked Nov 10, 2026Under the Homeowners Protection Act, you can ask to cancel PMI when the balance is scheduled to reach 80% of the home’s original value (with a good payment history, no junior liens, and no decline in value), and it ends automatically when the balance is scheduled to reach 78%. It also ends at the loan’s midpoint.
Source: CFPB: “When can I remove private mortgage insurance (PMI) from my loan?” (Ask CFPB #202) · checked Nov 9, 2026FHA: upfront and annual mortgage insurance premiums
Upfront premium (UFMIP): 1.75% of the base loan amount, and it can be added to the loan.
Annual premium (MIP): set by term, base loan amount, and LTV, and paid monthly.
| Term | Base loan amount | LTV | Annual MIP | How long |
|---|---|---|---|---|
| More than 15 years | $726,200 or less | 90.00% or less | 0.50% | 11 years |
| Over 90.00% up to 95.00% | 0.50% | Mortgage term | ||
| Over 95.00% | 0.55% | Mortgage term | ||
| More than 15 years | Over $726,200 | 90.00% or less | 0.70% | 11 years |
| Over 90.00% up to 95.00% | 0.70% | Mortgage term | ||
| Over 95.00% | 0.75% | Mortgage term | ||
| 15 years or less | $726,200 or less | 90.00% or less | 0.15% | 11 years |
| Over 90.00% | 0.40% | Mortgage term | ||
| 15 years or less | Over $726,200 | 78.00% or less | 0.15% | 11 years |
| Over 78.00% up to 90.00% | 0.40% | 11 years | ||
| Over 90.00% | 0.65% | Mortgage term |
VA: the funding fee
VA loans have no monthly mortgage insurance. Instead there is a one-time funding fee, which depends on the down payment and whether this is the first use of the benefit.
| Loan type | Down payment | First use | Subsequent use |
|---|---|---|---|
| Purchase or construction | Less than 5% | 2.15% | 3.3% |
| 5% or more | 1.5% | 1.5% | |
| 10% or more | 1.25% | 1.25% | |
| Cash-out refinance | n/a | 2.15% | 3.3% |
| Interest Rate Reduction Refinance Loan (IRRRL) | n/a | 0.5% | 0.5% |
| Loan assumption | n/a | 0.5% | 0.5% |
Exempt from the fee: veterans receiving (or eligible for) VA compensation for a service-connected disability; surviving spouses receiving Dependency and Indemnity Compensation; service members with a proposed or memorandum disability rating before closing; and active-duty Purple Heart recipients. If compensation is later awarded retroactive to before closing, the fee can be refunded.
Source: VA: “VA funding fee and loan closing costs” (page updated Oct 5, 2026) · checked Nov 10, 2026USDA: guarantee fees
For fiscal year 2027 (October 1, 2026 through September 30, 2027), USDA charges an upfront guarantee fee of 1.00% and an annual fee of 0.35% on both purchase and refinance loans. USDA can change the fees each fiscal year.
Source: USDA Rural Development: “Fiscal Year 2027 Conditional Commitment Notice” (Sep 16, 2026) · checked Nov 9, 2026USDA calculates the annual fee on the average scheduled balance for each year of the loan, recalculated every 12 months, and the lender collects it monthly with the payment.
Source: USDA Rural Development: “Annual Fee Calculation” (method sheet) · checked Nov 9, 2026When each one ends
| Program | Ends |
|---|---|
| Conventional PMI | By request at 80% of original value; automatically at 78%; at the loan midpoint at the latest. |
| FHA annual MIP | 11 years or the full mortgage term, depending on the row in the table above. |
| VA | No monthly premium; the funding fee is one-time. |
| USDA annual fee | Recalculated yearly on the scheduled balance. |
Compare all four on your own numbers with the mortgage insurance comparison.
Guidelines change; confirm with a licensed lender.