Mortgage Insurance Premium Requirements for a 15-Year FHA Loan

The Quick Read: Every 15-year FHA purchase loan carries two premiums: a one-time upfront premium of 1.75% of the base loan, and an annual premium collected monthly. The 15-year term puts you on the lower end of the annual premium range. Your down payment decides how long you pay it. With at least 10% down (90% LTV or less), the annual premium usually ends after eleven years. With less than 10% down, it usually runs for the whole term. Everything here is subject to lender guidelines and full file review.

What Is FHA Mortgage Insurance, and Why Does It Exist?

FHA mortgage insurance protects the lender, not you. If a borrower defaults, the FHA insurance fund pays the lender’s loss. That backing is why FHA loans can go up to 96.5% financing with a 3.5% minimum investment, starting at a 580 decision score across the wholesale programs Lendmire places files with.

It is not private mortgage insurance. PMI is sold by private insurers on conventional loans. FHA’s premium is set by HUD, and it follows HUD’s schedule, not an insurer’s underwriting.

People often blur the two, and that causes real mistakes. Conventional PMI rules about dropping coverage at a certain equity level do not carry over to FHA. The FHA schedule has its own rules, covered below.

Lendmire is a mortgage broker. It arranges FHA loan programs through wholesale lenders. The lender sets final terms, and nothing here is a commitment to lend.

What Are the Two Premiums on a 15-Year FHA Loan?

Both premiums apply to a standard purchase loan. HUD’s schedule sits in Handbook 4000.1, Appendix 1.0. The annual rates last changed in HUD Mortgagee Letter 2023-05, which is now folded into the Handbook. HUD’s superseded-documents page lists the letter as superseded by the Handbook. So the Handbook is the live rule and the letter is where the rates came from.

The upfront premium

The upfront premium is 1.75% of the base loan amount. The base loan is the loan before the premium is added. You can pay it in cash at closing or finance it into the loan. Across the wholesale programs, financing it is the common choice, and the premium is added on top of the base loan.

Because it scales with the loan, a larger loan means a larger upfront charge. Financing it raises the balance slightly. That does not change which annual tier you land in, because the tier is figured on the base loan, not the balance with the premium added.

The upfront premium did not change when HUD cut the annual premium. HUD’s 30 basis point reduction touched only the annual premium. HUD’s FHA INFO notice states that the cut applies by endorsement date, not by application date or closing date.

Lendmire also covers this topic in its piece FHA Upfront Mortgage Insurance Premium Financing and Refund Rules.

The annual premium

The annual premium is a percentage of the loan balance. HUD divides it by twelve, and your servicer collects it each month as part of the housing payment. It accrues from the start of amortization, following the original schedule.

On a 15-year loan, the annual premium sits at the low end of the program’s range. That range depends on term, loan amount and LTV. The lowest tier applies to the shorter term at or below 90% LTV. Above 90% LTV, the premium steps higher, and the highest tiers apply to larger loans with thin down payments. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.

A few narrow exceptions exist. Hawaiian Home Lands loans carry no annual premium. Indian Lands loans carry no upfront premium. Certain streamline refinances of older FHA loans carry no annual premium. A standard 15-year purchase falls into none of these.

How Is Your 15-Year Premium Tier Decided?

Six inputs set your tier, and here is how an underwriter works through them, step by step.

1. The lender sets the base loan amount. That is the price or appraised value, whichever is lower, less your down payment. County loan limits apply, and they change every year. The limit check comes first.

2. The lender figures the original LTV. On a purchase, that is the base loan against the lesser of price or appraised value. A 10% down payment gives exactly 90% LTV. A 3.5% down payment gives 96.5%. The appraisal decides the tier, not just the contract price. If the appraisal comes in under the price, your LTV rises. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.

3. The lender checks the term. Fifteen years or less uses the short-term schedule. That shorter amortization is what earns the lower annual premium.

4. The lender compares the base loan with HUD’s threshold. Above or below the Handbook’s base loan amount threshold changes the tier on lower-LTV loans. The current threshold is listed in Appendix 1.0 of the Handbook, and it is not the same figure as in older articles.

5. The upfront premium is calculated. It is 1.75% of the base loan.

6. The annual premium is set and divided by twelve. It shows up on your Loan Estimate and again on your Closing Disclosure.

The grid keys on the original LTV. Later appraisals showing more equity do not move you to a lower tier. For loans written under the older cancellation rules, HUD’s Handbook update notice says new appraised values are not used to test cancellation. It also says cancellation follows the initial amortization schedule.

What Does the Tier Table Look Like?

This table describes the structure in words and ties each row to the down payment. The Handbook holds the exact rates for each tier.

A larger loan can raise the annual rate within a row. The top tier, on a loan above the threshold with a thin down payment, is the highest on the 15-year grid. Its exact figure is set in Appendix 1.0 of the Handbook, and it sits well above the low-end tier.

How Long Will You Pay the Annual Premium?

The duration depends on the original LTV and the term. A 15-year loan at 90% LTV or below pays annual premium for eleven years. Above 90% LTV, it pays for the entire term. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.

Do the math on a short loan and eleven years is most of it. On a 15-year note, you are premium-free for only the last four years. On a thirty-year note at the same LTV, the same eleven years is about a third of the term. That is the quiet cost of the 15-year structure. The rate is low, but the paying period covers most of the loan.

Older loans follow other rules. Handbook 4000.1 sets different cancellation conditions for loans with older case numbers. Those loans can have their premium cancelled automatically when the LTV reaches a set level. If you hold an older FHA loan, ask your servicer which rule applies to you. A new loan today follows the grid above.

One more point. Paying down faster does not end the annual premium early on a new loan. The schedule is fixed at the start.

What Happens at the 10% Down Payment Line?

Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.

The 90% LTV line is the main decision lever on a 15-year FHA loan. It changes two things at once: the annual rate and the duration. Every figure here varies by lender and program, and guidelines, property type, leverage, and credit profile all apply.

Picture a buyer choosing between 8% down and 10% down on the same home. At 8% down, the loan sits above 90% LTV. The annual premium is higher and lasts for the full term. At 10% down, the loan lands at exactly 90% LTV. The annual rate drops to the low end of the range and the premium ends after eleven years. A small change in cash at closing moves the premium on both counts.

The appraisal can push you across the line. If the home appraises below the contract price, the LTV uses the lower value. A buyer planning on exactly 10% down can end up above 90% LTV after a low appraisal. Ask the loan officer how the appraisal affects your tier before you lock in a down payment plan. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.

This is not a reason to stretch your cash. Reserves and moving costs matter too. It is a reason to look at the 90% line before you decide how much to put down.

How Does a 15-Year FHA Loan Compare With a 30-Year?

The annual premium is lower on the 15-year term. The principal-and-interest payment is higher, because you repay the loan faster. Those two effects pull against each other.

Qualifying is part of the tradeoff. FHA counts the annual premium inside the housing payment for the debt ratios. The base pair is 31/43 with no compensating factors, and documented factors can reach 40/50 at the top tier. The automated finding governs most files. A 15-year payment is larger, so the ratio is tighter. A buyer who qualifies comfortably on a 30-year loan may find the 15-year payment stretches the ratio. Run both before you pick.

Lendmire’s team usually sees buyers choose the 15-year loan for the shorter payoff, not the premium. The premium savings are real but modest next to the principal difference.

Can You Get Out of FHA Mortgage Insurance?

For a 15-year loan, there are three ways out:

• Wait it out. At 90% LTV or below, the premium ends after eleven years.
• Refinance. Some borrowers refinance into a conventional loan once they have enough equity. A new FHA loan restarts the premium. A conventional loan has its own insurance rules.
• Sell or pay off. Either one ends the premium with the loan. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.

A refinance has its own costs, so compare the whole picture.

The FHA Streamline refinances an existing FHA loan with no appraisal, a limited credit review and a net tangible benefit. The premium continues on it. HUD can give a credit toward the upfront premium on a recent FHA loan, but the refund schedule is in the Handbook. Read it there before counting on a number.

Where Does the General Rule Break?

Several cases do not follow the standard 15-year pattern.

• Different programs. FHA’s reverse mortgage program (HECM) and Title I loans are separate. A Congressional Research Service overview notes that these premiums do not apply to certain FHA programs, including Title I loans and HECMs.
• Older loans. Case numbers assigned before the 2013 change follow older cancellation rules. Those can end the premium sooner.
• Specific exceptions. Hawaiian Home Lands, Indian Lands and certain older streamlines are described above.
• Cut timing. The 30 basis point annual cut depends on the endorsement date. A loan endorsed before the effective date keeps its older rate.
• Occupancy. FHA purchase loans are for a principal residence. The occupancy rule sets the program. It is not a premium variable.

What Mistakes Do Borrowers Make?

These come up on files often.

• Reading the wrong table. Many consumer pages show the long-term rates. A 15-year loan uses the short-term grid. The long-term rate does not apply to it.
• Using the old annual rate. Pages written before the cut can show a higher rate. Check the date on any page.
• Assuming PMI rules apply. FHA premiums are not cancelled at a set equity level on a new loan.
• Mixing up the base loan and the financed balance. The tier uses the base loan, not the balance with the upfront premium.
• Assuming a new appraisal removes it. On a new loan, later appraisals do not change the schedule.
• Skipping the appraisal risk. A low appraisal can push a 10% down payment above 90% LTV. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.

Key Terms Defined

Base loan amount: The loan before the upfront premium is added. The annual tier is figured on it.

Upfront mortgage insurance premium (UFMIP): The one-time premium of 1.75% of the base loan. It can be paid in cash or financed.

Annual mortgage insurance premium (MIP): The yearly premium, charged as a percentage of the balance and collected monthly.

Original LTV: The loan-to-value ratio at the start, based on the lesser of price or appraised value. It sets your tier and the duration.

Endorsement date: The date FHA insures the loan. Rate changes apply by this date.

Handbook 4000.1: HUD’s rulebook for FHA lenders. Appendix 1.0 holds the premium schedule.

Next Steps

If you are buying a home and want to see whether an FHA loan fits your file, Lendmire can help you compare the options and what each one asks of the file. Bring your target down payment and your term question, and the loan officer can show you which tier applies.

For your own numbers, request a scenario review with Lendmire.

About Lendmire

As a mortgage broker (NMLS# 2371349), Lendmire helps homeowners and home buyers in 16 states with FHA, VA, conventional and jumbo purchase and refinance loans arranged through wholesale lenders. Lendmire is never the lender; program terms are set by the lender and the agency guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.

References

1. HUD Mortgagee Letter 2023-05

2. HUD superseded documents page

3. HUD FHA INFO 2023-11

4. HUD Handbook 4000.1 update notice

5. Congressional Research Service: FHA-Insured Home Loans