FHA loans · Guide

FHA to Conventional: Ending Mortgage Insurance by Refinancing

When moving from FHA to a conventional loan can end mortgage insurance, and what to weigh.

  • Reading time2 min
  • Official sources2 cited
  • Updated
  • Last reviewed

Quick answer

For many FHA loans with case numbers assigned since June 2013, annual MIP lasts for the life of the loan when the original loan-to-value exceeded 90 percent. Refinancing into a conventional loan is the most common way to end it.

Key takeaways

  • Conventional loans at or below 80 percent loan-to-value do not need private mortgage insurance. Equity needed
  • Conventional pricing depends heavily on credit score. Credit
  • Weigh closing costs against monthly MIP savings to estimate a break-even point. Costs

Why borrowers switch

For many FHA loans with case numbers assigned since June 2013, annual MIP lasts for the life of the loan when the original loan-to-value exceeded 90 percent. Refinancing into a conventional loan is the most common way to end it.

Equity needed

Conventional loans at or below 80 percent loan-to-value do not need private mortgage insurance. Above that, PMI applies but can usually be cancelled later under the Homeowners Protection Act.

Credit

Conventional pricing depends heavily on credit score. Improved credit since your FHA purchase can make the switch more attractive.

Costs

Weigh closing costs against monthly MIP savings to estimate a break-even point.

Appraisal

A conventional refinance usually needs an appraisal unless an agency waiver is offered.

Timing

Some borrowers wait until home values or principal paydown reach a level where no PMI is needed.

Compare

Request Loan Estimates for both an FHA streamline and a conventional refinance to see total costs side by side.

If you cannot switch yet

If equity or credit is not yet enough for a conventional loan, an FHA streamline may still lower the combined rate and premium. Revisit the conventional option after another year of payments or improved credit. Keep track of your home's estimated value through recent local sales, and ask a lender for a quick review when you think you may be close.

Sources

Sources reviewed . General education only; confirm current rules with official sources and a licensed lender.

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