The Quick Read: It depends on four things: how long the FHA premium would otherwise stay on the loan, whether the condo building qualifies for a conventional loan, how much equity the unit has, and whether the monthly savings outlast the closing costs. A refinance is the usual way to end FHA mortgage insurance on a low-down-payment loan. For condo owners, the building has to pass a review of its own, and that step often decides the outcome. Everything here is subject to lender guidelines and full file review, and nothing is a commitment to lend.
How Long Does FHA Mortgage Insurance Last on a Condo?
The length of the annual premium depends on the loan, not on the property type. Across the wholesale programs Lendmire places FHA files with, the annual premium runs between 0.15% and 0.75% of the balance, depending on term, loan amount and LTV. On a thirty-year loan above 90% LTV, it lasts the full term. At or below 90% LTV, it ends after eleven years. The upfront premium is 1.75% of the base loan, and most borrowers finance it into the balance.
Refinance savings and break-even estimate
The starting figures are an example value with a balance in proportion and a placeholder for costs. Replace them with yours, and enter the current rate from your statement.
Editable benchmark: 7.32% as of October 22, 2026 · Freddie Mac 30-year average via FRED®. A conventional market reference, not a refinance quote.
Illustrative starting assumptions: a $350,000 home value, a $245,000 current balance, a current rate you enter and a remaining term seeded at twenty-five years, closing costs seeded at $5,000 as an editable placeholder (not a fee quote) and rolled into the new loan, a thirty-year term at the current Freddie Mac benchmark, and property taxes and insurance estimated at typical national rates. Every field is editable.
Illustrative estimate only — not a Loan Estimate, approval, quote, or commitment to lend. The new rate field carries the weekly Freddie Mac thirty-year conventional benchmark, a market reference and not a refinance quote; a refinance is priced by the lender at lock, and the current rate, the remaining term and the closing costs are figures you enter. The current payment is estimated from the balance, the current rate and the remaining term; the break-even divides the closing costs by the monthly saving and ignores the interest effect of a longer term. On the VA IRRRL the funding fee is added to the loan unless the veteran is exempt. Taxes and insurance are editable estimates. Licensed in sixteen states for consumer mortgages; Lendmire is a broker, never the lender.
Older loans follow a different rule. Under HUD's handbook, annual premiums on pre-2013 loans can cancel once the balance reaches 78% of the original value, after at least five years of payments. If your loan is that old, check before you refinance. You may not need to.
Here's the catch for everyone else. HUD's handbook says new appraised values are not used when testing whether the cancellation point has been reached. A condo that has gone up in value does not shed FHA insurance on its own. That is why a refinance is the exit.
Why Does a Conventional Loan Change the Math?
Private mortgage insurance on a conventional loan can be removed by law, and FHA premiums work differently. The CFPB explains that a servicer must automatically terminate PMI when the scheduled balance reaches 78% of the home's original value. You can also request cancellation at 80%. Conditions apply: a written request, a good payment history, no junior liens, and proof the value hasn't dropped below the original.
A new conventional loan with 20% or more equity may not carry PMI at all. With less equity, PMI applies at first, but it has a path to cancellation that FHA premiums lack. That path is the real prize in a refinance like this.
One more point. The cancellation rights above apply to private insurance on conventional loans, not to FHA.
Does Your Condo Building Qualify? (The Step That Decides It)
This is where condo files differ from house files. The new lender reviews the building as well as you. A conventional loan that Fannie Mae will buy requires the project to be acceptable under its guidelines. A project Fannie Mae has marked ineligible shows as "Unavailable," and loans on units inside it can't be sold to Fannie Mae. Other statuses, such as an incomplete certification, also stop the file until they are fixed.
FHA approval of your building does not carry over. HUD's condominium page lists project factors such as insurance coverage, financial condition, title, pending legal action and physical condition. Conventional reviews look at similar items, and the tests can differ. A building can pass one and fail the other.
What the lender looks at:
| What gets reviewed | Why it matters | Where to ask |
|---|---|---|
| Association budget and reserves | Thin reserves can fail a review | HOA manager |
| Delinquent dues | High delinquency can stop the file | HOA manager |
| Pending litigation | Open suits can make a project ineligible | HOA board |
| Master insurance coverage | Gaps stall the questionnaire | HOA insurance agent |
| Owner-occupancy mix | Too many rentals can fail the test | HOA records |
Ask for these documents before you apply. The paperwork sits with a management company that has no deadline of its own.
Three Paths for a Condo FHA Owner
You have three realistic routes. They end very differently on the insurance question.
| Path | Insurance result | Best fit |
|---|---|---|
| Conventional refinance, 20%+ equity | No PMI | Strong equity, eligible building |
| Conventional refinance, less equity | PMI now, cancellable later | Moderate equity, long stay |
| FHA Streamline | FHA premium continues | Lower payment, building can't pass |
The FHA Streamline refinances an existing FHA loan with no appraisal, a limited credit review and a net tangible benefit requirement. It can lower the payment. It does not remove the premium, because the new loan carries FHA insurance too. For loans endorsed on or after March 20, 2023, HUD cut the annual premium by 30 basis points. If you already hold a loan at the lower rate, a Streamline may save you less than you expect.
An FHA rate-and-term refinance with an appraisal reaches 97.75% on a principal residence you've occupied for the previous twelve months. An FHA cash-out reaches 80% LTV on a home owned and occupied for twelve months before the case number. Both keep FHA insurance in place. Lendmire's piece How to End Mortgage Insurance After an FHA Cash-Out on a Condo covers that route in more depth. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
How Do You Run the Break-Even?
Divide your total closing costs by your monthly savings. The answer is the number of months before the refinance pays for itself. If you expect to sell or move before then, skip it.
Build the savings side from the full payment, not just the premium line:
1. Pull your current payment, including principal, interest, mortgage insurance, HOA dues, taxes and homeowners insurance.
2. Get a Loan Estimate for the new loan with the same items.
3. Subtract the new total from the old one. That's your monthly savings.
4. Divide the closing costs on the Loan Estimate by that savings figure.
5. Compare the result to how long you plan to stay.
Three condo-specific adjustments matter. HOA dues and special assessments stay the same either way, and they count in your debt-to-income ratio. Condo property type can also affect pricing on a conventional loan, so the savings are often smaller than a single-family example suggests. And a new loan resets your term, which can raise total interest even when the payment drops.
On the upfront premium: when you refinance out of FHA, a partial refund of the upfront premium may apply under HUD's rules. Ask your loan officer to confirm the refund treatment on your specific loan, since it depends on timing.
What Do You Need to Qualify for the Conventional Exit?
Qualification is a full re-underwrite. The new lender reviews income, credit, debts and reserves under the new program's rules. Equity is set by a new appraisal, which is the opposite of HUD's cancellation test. Comparable sales inside your building and nearby projects drive that value.
A strong file usually shows a clean recent payment history, steady income, and a debt-to-income ratio that holds up with HOA dues included. A payment history with late marks makes the exit harder. So does a building with a pending lawsuit.
If your building fails the conventional review, the file doesn't end. You can stay in the FHA loan, look at a Streamline option, or wait for the project's status to change. Some associations fix a missing item, such as a lapsed insurance certificate, and become eligible later.
When Is Refinancing the Wrong Move?
Skip it in these cases:
- Short horizon. If you'll move before the break-even, the closing costs never come back.
- Thin equity. With little equity, PMI may offset most of the savings.
- Ineligible building. If the project fails the conventional review, the main reason to refinance disappears.
- Pre-2013 loan. The premium may cancel on its own at the 78% test.
- Eleven-year clock nearly done. If your loan started at or below 90% LTV and the eleven years are close to ending, waiting may cost less than refinancing. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Worth refinancing: strong equity, an eligible building, a long stay, and a break-even that lands well inside your horizon. That combination is rare enough that it's worth checking building status first, before any other step.
Borrowers exploring FHA options for their own home can review FHA loan programs to see how the mechanics fit.
Key Terms Defined
MIP (mortgage insurance premium): The FHA's insurance charge, made up of an upfront premium and an annual premium.
PMI (private mortgage insurance): Insurance on a conventional loan with a small down payment. It can be cancelled by law once equity builds.
LTV (loan-to-value): The loan balance divided by the home's value.
FHA Streamline: A refinance of an existing FHA loan with limited review. It keeps FHA insurance.
Project review: The lender's check of the condo building's finances, insurance, litigation and occupancy.
Net tangible benefit: HUD's test that a refinance must give the borrower a real, measurable gain.
Frequently Asked Questions
Does my condo's value going up remove FHA mortgage insurance?
No. New appraised values are not used when testing for premium cancellation. Newer loans end insurance by time and original down payment, not by current equity. A refinance with a new appraisal is how rising value gets counted.
Can I refinance an FHA condo loan without the building being reviewed?
For an FHA Streamline, the review is generally lighter, since it refinances an existing FHA loan with no appraisal. A conventional refinance reviews the building. Confirm the current requirement with your loan officer before you rely on it.
Does an FHA Streamline get rid of mortgage insurance?
No. The new loan carries FHA insurance again under current rules. A Streamline can lower the payment and must show a net tangible benefit, but the premium continues.
What if I have less than 20% equity?
A conventional refinance would likely include PMI at first. PMI differs from FHA insurance because it can be cancelled once the balance reaches the required point, subject to conditions such as a good payment history and no junior liens.
Is the upfront premium refunded when I refinance out of FHA?
A partial refund may apply under HUD's rules, depending on timing. Ask your loan officer to confirm how it applies to your loan.
If you are weighing a refinance and want the break-even run on your own numbers, Lendmire can help you compare the programs on the same home.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage serving homeowners and home buyers in 16 states. FHA, VA, conventional and jumbo purchase and refinance loans are arranged through wholesale lending channels; Lendmire brokers the financing and the lender underwrites each application. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. HUD – Handbook 4000.1 excerpt (MIP cancellation, refinance MIP)
2. CFPB – When can I remove PMI
3. Fannie Mae Selling Guide B4-2.2-02, Full Review
This article is part of Lendmire’s FHA loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can You Get an FHA Cash-Out on a Condo in Litigation? · Can a Homeowner With an FHA Loan Use an FHA Cash-Out for Any Purpose? · Does a Late Payment on Your FHA Loan Block an FHA Cash-Out?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.