Mortgage Insurance Premium Changes 2027

FHA charges two types of mortgage insurance: (1) Upfront MIP (UFMIP): 1.75% of the loan amount, paid at closing or rolled into the loan; (2) Annual MIP: paid monthly, divided into 12 payments. Following the March 2023 FHA rate cut, annual MIP rates for most 30-year loans are now: 0.55% for LTV ≤95% (down from 0.85%) and 0.50% for LTV ≤90%. On a $400,000 FHA loan, annual MIP = $2,200/year ($183/month) at 0.55%. Jumbo FHA loans (>$625,500) carry slightly higher rates. The March 2023 cut saved borrowers an average of $800/year. See HUD — FHA mortgage insurance premiums.

FHA MIP cancellation depends on when your loan was originated and your down payment: (1) Loans with ≥10% down payment (LTV ≤90%): MIP cancels automatically after 11 years; (2) Loans with <10% down (LTV >90%): MIP applies for the entire loan term — it cannot be cancelled unless you refinance into a conventional loan. This is a key distinction from PMI. If you put less than 10% down on an FHA loan, you'll pay MIP for 30 years unless you refinance. Many FHA borrowers refinance to conventional when their equity reaches 20% (LTV ≤80%) to eliminate MIP. See PMI vs. MIP explained and HUD — MIP cancellation rules.

Private Mortgage Insurance (PMI) applies to conventional loans with less than 20% down. Key 2027 rules: (1) Automatic cancellation: PMI must be cancelled when your loan balance reaches 78% of the original home value (Homeowners Protection Act); (2) Borrower-requested cancellation: you can request cancellation when your balance reaches 80% LTV; (3) Appraisal-based cancellation: if your home has appreciated significantly, you can request PMI removal with a new appraisal showing ≥20% equity; (4) PMI cost: typically 0.2%–1.5% annually depending on credit score, LTV, and loan type. On a $400,000 loan with 5% down, PMI might be $100–$200/month. See how to remove PMI.

In Canada, mortgage default insurance is mandatory for all mortgages with less than 20% down payment. Providers include CMHC, Sagen (formerly Genworth), and Canada Guaranty. CMHC premiums are a one-time upfront charge added to your mortgage balance: (1) 5%–9.99% down → 4.00% premium; (2) 10%–14.99% down → 3.10% premium; (3) 15%–19.99% down → 2.80% premium. On a $600,000 purchase with 5% down ($30,000), the CMHC premium = 4.00% × $570,000 = $22,800 added to your mortgage. Unlike US MIP, CMHC insurance is non-cancellable — it stays for the life of the mortgage regardless of equity growth. See CMHC insurance glossary and CMHC — Mortgage loan insurance.

Lender-paid PMI (LPMI) is an arrangement where the lender pays the PMI premium upfront in exchange for a slightly higher interest rate on your mortgage. Benefit: no separate monthly PMI payment, and the higher rate may be tax-deductible as mortgage interest (PMI deductibility has been inconsistent in US tax law). Drawbacks: (1) the higher rate is permanent — unlike regular PMI which eventually cancels; (2) LPMI can cost more over the full loan life if you hold the loan long-term; (3) refinancing is the only way to eliminate the rate premium. LPMI makes most sense for buyers who plan to sell or refinance within 5–7 years. Compare LPMI vs. borrower-paid PMI using total cost over your expected hold period. See CFPB — Private mortgage insurance overview.