The Quick Read: Yes. On a standard FHA cash-out refinance, annual mortgage insurance ends on its own after 11 years on a 30-year loan. It does not run for the life of the loan, because a cash-out is capped at 80% of the home’s value, and that puts it in HUD’s “90% LTV or less” tier. You cannot cancel it sooner by paying down the balance, and a new cash-out starts a fresh 11-year clock. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
Most online answers say FHA mortgage insurance lasts “forever.” That is true for some loans and wrong for this one. The difference comes down to one number set on the day the loan is made, and a cash-out refinance sits on the favorable side of it.
FHA cash-out estimate
Seeded with an example value, a balance to match, and a round cash request; change any field.
Editable benchmark: 7.24% as of October 29, 2026 · Freddie Mac 30-year average via FRED®. A conventional market reference, not an FHA cash-out refinance quote.
Illustrative starting assumptions: a $350,000 home value, a $193,000 current balance, the FHA cap on a principal residence with the upfront premium financed, a thirty-year term at the current Freddie Mac benchmark, and property taxes and insurance estimated at typical national rates. Every field is editable.
An illustration, not a Loan Estimate, an approval, a quote, or a commitment to lend. The rate shown is the weekly Freddie Mac thirty-year conventional benchmark, used as a market reference; an FHA cash-out is priced by the lender at lock, and this is not an FHA cash-out refinance quote. HUD’s cap limits the base loan; the upfront premium is financed on top of the capped base loan; the monthly premium for the first year follows the snapshot’s schedule. Cash available means the base loan the cap permits less the balances retired, before closing costs, which this calculator leaves out. The line figure applies the line program’s combined loan-to-value ceiling to the same value and balance. Taxes and insurance are estimates you can edit. Licensed in sixteen states for consumer mortgages.
Why Does an FHA Cash-Out Get the Shorter Clock?
An FHA cash-out gets the shorter clock because HUD sets how long annual MIP lasts by the loan-to-value ratio at origination. A cash-out cannot exceed 80% LTV, so it always lands in the tier at or below 90%, where the premium ends after 11 years. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
HUD’s rule for case numbers assigned on or after June 3, 2013 has two tiers, per HUD’s FHA Answers page on MIP duration:
- LTV above 90% at origination: annual MIP is collected until the end of the loan term, or 30 years, whichever comes first.
- LTV of 90% or less at origination: annual MIP is collected until the end of the loan term, or 11 years, whichever comes first. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
HUD Mortgagee Letter 2023-05 shows the same table. For terms longer than 15 years, the duration is 11 years at 90.00% LTV or less, and the full mortgage term above 90.00%. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
Here is the catch for readers who have seen “life of the loan” advice. Across the wholesale programs we place FHA files with, a purchase loan at the maximum 96.5% financing sits above the 90% line. That borrower pays annual MIP for the full term on a 30-year loan. A cash-out never gets near that leverage. The FHA cash-out reaches 80% LTV on a home owned and occupied for 12 months before the case number, so the shorter tier is built into the product. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
Lendmire’s FHA cash-out refinance program page covers the program basics.
Key Terms Defined
Annual MIP: the yearly mortgage insurance premium on an FHA loan, billed as part of the monthly payment.
Upfront MIP: a one-time premium of 1.75% of the base loan, which borrowers commonly finance into the balance.
LTV (loan-to-value): the loan amount divided by the home’s appraised value.
Origination: the point when the new loan is made. HUD fixes the MIP duration here.
Case number: the FHA identifier assigned to your loan file. Its date decides which set of HUD rules applies.
Adjusted value: the appraised value HUD uses to set the cash-out limit.
How the Cash-Out Math Sets the Clock
The cash-out limit is 80% of the appraisal-based adjusted value, and that limit sets the MIP tier. The loan amount, including any financed upfront premium, has to fit under that cap. In practice, at least 20% equity stays in the home.
HUD lowered the cap from 85% to 80% through ML 2019-11, effective for case numbers assigned on or after September 1, 2019, per the HUD press release announcing the change. If you see 85% quoted somewhere, the source is out of date.
The sequence looks like this:
1. You meet the cash-out eligibility test: a principal residence you have owned and occupied for 12 months before the case number. 2. The appraisal sets the adjusted value. 3. The new loan is sized at no more than 80% of that value. 4. That origination LTV places the loan in the 90%-or-less tier. 5. The annual premium is collected until year 11, then stops.
Your old loan’s MIP history does not carry over. The cash-out is a new FHA loan with its own origination LTV and its own clock. The years you paid on the old loan do not count toward the new 11.
What Decides Whether Your Annual MIP Ends?
Three facts decide it: the date your case number was assigned, your LTV at origination, and your loan term. For a new cash-out, the first two are settled by the rules above, so term is the main variable left.
| Factor | What it does | On a new cash-out |
|---|---|---|
| Case number date | Picks the rule set | After June 3, 2013 rules apply |
| LTV at origination | Picks the duration tier | 80% cap means the 11-year tier |
| Loan term | Can end the premium sooner | 11 years or the term, whichever is first |
| Principal paydown | Lowers the premium dollars | Does not cancel early |
Shorter terms are covered by the same logic. On a term of 15 years or less, the annual MIP rate differs, but the duration is still set by LTV, and 90% or less means 11 years. Loan size affects the rate tier, not the duration. The annual premium on FHA loans runs between 0.15% and 0.75% of the balance depending on term, amount and LTV, and that figure is a program fact, not a quote.
A Worked Example, Start to Finish
Picture a homeowner who has lived in her house for several years on an FHA loan. Her home has appreciated and she has paid the balance down, so she wants cash for a renovation. She applies for an FHA cash-out refinance.
The appraisal comes in and the lender sizes the new loan at 80% of the adjusted value, the maximum. Her old FHA loan is paid off at closing, and with it her old MIP schedule. The new loan carries an upfront premium of 1.75%, which she finances, and an annual premium for the term and LTV.
Because the new loan was originated at 80% LTV, HUD’s rule puts it in the 11-year tier. For 11 years she pays annual MIP as part of her monthly payment. At the start of year 12, the servicer stops collecting it. Nothing she does in between, including extra principal payments, changes that date. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Two things to notice. First, the clock is not measured from her original purchase. It starts at the cash-out closing. Second, if she refinanced again into another FHA loan, the clock would restart on that newer loan.
Why Extra Payments and New Appraisals Don’t Cancel It
They don’t cancel it because HUD fixes the duration at origination. HUD’s FHA Answers page states that borrowers may not request early cancellation of annual MIP based on prepayment of principal.
This surprises borrowers who know conventional mortgages. With private mortgage insurance, you can often ask to drop it once your equity reaches a threshold, sometimes with a new appraisal. FHA works differently. Paying down principal shrinks the annual premium in dollars, since it is a percentage of the balance, but it does not shorten the period.
Myths and Outdated Rules
Most of the confusion online comes from rules that applied to older loans or a different loan type.
“FHA MIP is forever.” Only above 90% LTV on a longer term. A cash-out is capped at 80%, so it falls in the 11-year tier. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
“It drops off at 78% LTV.” That cancellation rule is for older loans. For mortgages with terms over 15 years from before the 2013 change, HUD cancels annual MIP automatically at 78% of the lesser of the original sales price or appraised value, once five years of annual MIP have been paid. HUD bases it on the initial amortization schedule, per its Handbook 4000.1 update transmittal. It does not apply to a new cash-out. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
“The 2023 premium cut shortened the duration.” It did not. ML 2023-05 changed annual rates and the base loan amount threshold. It left the duration table alone. HUD said at the time that the cut would benefit about 850,000 borrowers, according to FHA INFO 2023-11. That is context for scale, not a change in duration.
“A bigger loan means a longer premium.” A loan above the base amount threshold carries a higher rate, but the duration rules are the same. County loan limits apply, and they change every year.
“A loan at exactly 90% is in the long tier.” HUD’s wording is “90% or less,” so exactly 90% is in the 11-year tier. This rarely matters on a cash-out, since the cap is 80%.
Your Exit Options Before Year 11
You have four realistic options if you would rather not wait out the 11 years. Which one is right depends on how long you plan to stay, how much equity you have, and how the new loan’s insurance compares with what you pay now.
| Option | Annual MIP outcome | Trade-off |
|---|---|---|
| Stay in the loan | Ends after year 11 | Pay the premium until then |
| Refinance to conventional | FHA MIP ends with the old loan | Needs equity and credit to avoid PMI |
| Sell | MIP ends at payoff | Depends on your plans |
| Refinance to a new FHA loan | A new clock starts | Resets the 11 years |
Here is the flip point. If you have well over 20% equity and solid credit, a conventional refinance may remove mortgage insurance entirely, but it comes with new closing costs and a new loan to compare. If your equity is thin or your credit is stronger on FHA’s terms than on a conventional file, staying put and letting the 11 years run may be the better call. Refinancing into another FHA loan restarts the clock, so doing it only to chase a small payment change can extend the total time you pay.
This is also where the premium history matters. The wholesale programs we work with start at a 580 decision score for FHA, while conventional files often need more credit strength or equity to avoid PMI. That difference is why some borrowers stay FHA on purpose.
FHA Cash-Out vs. Streamline vs. Other Equity Options
A cash-out is only one way to use FHA, and the MIP outcome differs by product. The comparison below keeps them apart, since mixing them up is the source of most bad advice.
| Product | Cash to borrower | Annual MIP outcome |
|---|---|---|
| FHA cash-out | Yes, up to 80% LTV | 11 years on a 30-year loan |
| FHA Streamline | No | Premium continues under the new loan |
| FHA rate-and-term | No | Duration set by the new LTV |
| Conventional cash-out | Yes | No FHA MIP |
The Streamline refinances an existing FHA loan with no appraisal, a limited credit review and a net tangible benefit. It does not take cash out, and it does not remove the premium. ML 2023-05 also carves out Section 247 Hawaiian Home Lands loans and certain streamline refinances from its table, so those follow their own treatment.
FHA applies to owner-occupied primary residences. A second home or rental does not fit this loan, and occupancy decides the leverage. That is the whole answer for non-owner-occupied property.
How to Check Your Own Situation
You can confirm your MIP duration in a few minutes with three documents. Do this before assuming anything from a general article, including this one.
- Find your case-number date. It appears on your closing paperwork. After June 3, 2013 means the current duration rules apply.
- Find your origination LTV. Compare the loan amount to the appraised value on your closing documents.
- Ask your lender to confirm the MIP duration shown in your closing paperwork, and ask when your servicer expects to stop collecting.
Rules change by Mortgagee Letter, and a new letter can override the handbook before it is consolidated. HUD publishes the current handbook on its Handbook 4000.1 portal. Ask a broker or lender to verify the current premium schedule against it before you commit. All program figures here are subject to lender guidelines and full file review, and none of it is a commitment to lend.
Frequently Asked Questions
Does the 11 years start when I bought the house or when I refinanced?
It starts when the cash-out loan is originated. The cash-out is a new FHA loan, and HUD sets the premium duration at origination. Years paid on your old loan do not count toward the new 11.
Can I get rid of annual MIP sooner by paying extra principal?
No. HUD does not allow early cancellation of annual MIP based on prepayment of principal. Extra payments lower your balance and therefore the premium dollars, but the end date stays where it was set.
Is the upfront premium also charged on a cash-out?
Yes. An upfront premium of 1.75% of the base loan applies, and borrowers commonly finance it into the balance. That raises the loan amount, which still has to fit under the 80% cap.
Does an FHA Streamline remove annual MIP?
No. A Streamline refinances an existing FHA loan with no cash out, and the premium continues under the new loan’s rules. Only leaving FHA, through a conventional refinance, a sale or a payoff, ends the insurance before its scheduled date.
Will a cash-out ever keep MIP for the full 30 years?
Not under HUD’s current tiers for a standard cash-out. The loan is capped at 80% LTV, which is below the 90% line, so annual MIP ends at 11 years on a 30-year term. Always have your lender confirm against your paperwork, since HUD can change premium rules by Mortgagee Letter. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
Weighing a Cash-Out Against Keeping Your Loan
The MIP answer is only one input. The bigger question is whether pulling equity makes sense against the loan you already have, and what happens to the 11-year clock if you do. If you are weighing a cash-out refinance against keeping the loan you have, Lendmire can help you compare the programs and the equity each one reaches.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire, NMLS# 2371349, is a mortgage brokerage with consumer lending licenses in 16 states. FHA, VA, conventional and jumbo purchase and refinance loans are arranged through wholesale lending partners, and each application is reviewed individually by the lender. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
Get Started
Ready to find the right loan for you?
See your offer in seconds. No credit pull, no obligation.
Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
1. HUD FHA Answers: How long is MIP collected (case numbers on/after June 3, 2013)
2. HUD Mortgagee Letter 2023-05
3. HUD Archives press release on cash-out LTV
4. HUD Handbook 4000.1 update transmittal
This article is part of Lendmire’s FHA cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Best FHA Cash-Out Refinance Program When Rolling Closing Costs Into the Loan Balance · VA Cash-Out vs FHA Cash-Out for a Former Service Member’s Spouse · Can an FHA Cash-Out Refinance Pay Off a Spouse in a Divorce?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.