Dropping FHA mortgage insurance: wait it out, or refinance out
Refinancing to conventional
Crossroads answer
Refinancing into a conventional loan replaces FHA insurance. With enough equity, the new loan needs no private mortgage insurance at all; with less, it may need PMI, which, unlike life-of-loan MIP, can be cancelled later under federal rules. Compare the full cost, including closing costs and any PMI, against keeping the FHA loan.
Last reviewed against the primary sources listed below.
Compare before switching
- Your current FHA payment, including MIP.
- The conventional payment, including any PMI.
- Closing costs and how long it takes to recover them.
- Whether your credit fits conventional pricing.
MIP questions
Is it worth refinancing from FHA to conventional?
Often when you have built equity and your credit has improved, but compare full costs first.