To get rid of PMI on an FHA loan, you almost always have to refinance. FHA loans carry a Mortgage Insurance Premium (MIP) rather than true PMI, and for borrowers who took out an FHA loan after June 2013 with less than 10% down, that premium lasts the entire life of the loan. Refinancing into a conventional mortgage is the only way to drop mortgage insurance entirely. A smaller group of borrowers can wait it out instead.
Can Your FHA Loan Drop MIP On Its Own
Before you refinance, check whether your loan is one of the few that will shed MIP without any action. Two dates and one number decide this: when FHA assigned your case number and how much you put down.
Case Number Assigned On Or After June 3, 2013
Your MIP duration is locked to your original loan-to-value ratio. If you put down at least 10%, you pay annual MIP for 11 years and then it stops. If you put down less than 10%, you pay MIP for the full loan term.1U.S. Department of Housing and Urban Development. How Long Is MIP Collected for Case Numbers Assigned on or After June 3, 2013 The rule is the same for 15-year and 30-year loans. If your down payment was under 10%, waiting will not help. Refinancing is the exit.
Case Number Assigned Before June 3, 2013
Older FHA loans follow a friendlier rule. Your servicer must cancel annual MIP once three things are true: the loan balance has reached 78% of the original property value, you have paid premiums for at least five years, and you are current on your payments.2U.S. Department of Housing and Urban Development. Mortgagee Letter 2013-04 – Revision of FHA Policies Concerning Cancellation of the Annual Mortgage Insurance Premium No refinance required. Your closing disclosure will show the case number assignment date, or your servicer can confirm it over the phone.
Refinancing Into A Conventional Loan
This is the main path for anyone whose FHA loan will otherwise carry MIP for its full term. A conventional mortgage does not require any mortgage insurance if you have at least 20% equity in the home. Even with less equity, conventional PMI is usually cheaper than FHA MIP, and unlike FHA MIP, it can be canceled later without another refinance.
How Much Equity You Need
Equity is the gap between your home’s current market value and your remaining loan balance. To skip mortgage insurance entirely on the new loan, you need the balance to be 80% or less of the appraised value.3Consumer Financial Protection Bureau. When Can I Remove Private Mortgage Insurance (PMI) From My Loan If the current value has climbed since you bought, you may already be there without realizing it. The lender’s appraisal will settle the question.
Credit And Debt-To-Income
Fannie Mae’s automated underwriting system removed its minimum credit score requirement as of November 2025.4Fannie Mae. Selling Guide Announcement SEL-2025-09 Individual lenders still set their own floors, typically somewhere in the 620 to 680 range, and better scores earn better rates. On debt-to-income, Fannie Mae’s standard maximum is 45%, with automated approvals possible up to 50% when other factors are strong.5Fannie Mae. Debt-to-Income Ratios
Documents To Gather
- Two years of W-2s and federal tax returns, plus your two most recent pay stubs.
- Bank statements covering the last 60 days.
- A payoff statement from your current FHA servicer showing the exact amount to retire the loan, including daily interest.
The Refinance Process
Apply with more than one lender. A quarter-point rate difference compounds into thousands over a 30-year loan, and closing cost quotes vary widely. Once you accept an offer, the lender orders an appraisal to confirm value and equity. Single-family appraisals for conventional loans generally run $300 to $450. Underwriting follows, and the lender must deliver a closing disclosure at least three business days before you sign.
At closing, the new lender pays off your FHA loan directly. That retires your FHA case number and ends all future MIP charges. Your old servicer should confirm the payoff within about 30 days and refund any remaining escrow balance by check.
PMI On The New Conventional Loan
If you refinance with less than 20% equity, the new loan will have PMI. The important difference from FHA MIP is that conventional PMI comes off under the Homeowners Protection Act without another refinance.
- You can request cancellation once the loan balance reaches 80% of the home’s value at the time of the refinance closing.6Consumer Financial Protection Bureau. Homeowners Protection Act (PMI Cancellation Act) Procedures
- The servicer must terminate PMI automatically when the scheduled balance reaches 78% of that value, provided you are current on payments.3Consumer Financial Protection Bureau. When Can I Remove Private Mortgage Insurance (PMI) From My Loan
The “value” for both thresholds is the appraised value at the conventional refinance closing, not what you originally paid for the home under FHA. Extra principal payments move you toward the 80% threshold faster and let you request cancellation earlier.
FHA Streamline Refinance As A Partial Alternative
If a conventional refinance is out of reach because of credit or equity, an FHA Streamline Refinance can lower your rate and payment without switching loan types. It will not eliminate MIP. Your existing loan must be FHA-insured, your payments current, and the new loan must produce a “net tangible benefit.” Cash-out is capped at $500, and lenders cannot roll closing costs into the new loan.7U.S. Department of Housing and Urban Development. Streamline Refinance Your Mortgage Credit documentation is limited and a new appraisal may not be needed.
Borrowers whose original FHA loan was endorsed on or before May 31, 2009, get sharply reduced streamline premiums: 0.01% upfront and 55 basis points annually regardless of LTV.8Federal Deposit Insurance Corporation. Streamline Refinance
Upfront MIP Refund If You Refinance FHA To FHA
Every FHA loan carries an upfront MIP of 1.75% of the base loan amount, typically financed into the balance.9U.S. Department of Housing and Urban Development. Appendix 1.0 – Mortgage Insurance Premiums If you refinance from one FHA loan into another within three years, you can get a partial credit back against the upfront MIP on the new loan. The refund starts at 80% in the first month and drops by about 2 percentage points per month, reaching roughly 58% at 12 months and 10% at 36 months. After 36 months, no refund is available. The credit is never paid in cash and it does not apply if you refinance into a conventional loan. Your new FHA lender calculates and applies it during processing.
Figure Out Your Break-Even Point
Refinancing costs money upfront. Closing costs generally run 2% to 6% of the new loan amount. The Federal Reserve suggests a simple calculation: divide total closing costs by monthly savings.10The Federal Reserve Board. A Consumer’s Guide to Mortgage Refinancings The result is how many months it takes to break even. If refinancing costs $6,000 and you save $200 a month, you break even in 30 months. Sell or move before then and you lose money on the deal.
When you calculate savings, include both the dropped MIP and any change in the interest rate. A higher conventional rate can shrink or wipe out the MIP savings. Watch the loan term too. Restarting a 20-year remaining balance as a new 30-year loan lowers the payment but adds years of interest to the total cost of the home.