Two numbers decide this: how much you put down when you bought, and how much equity you hold now. HUD sets how long the annual premium lasts based on your loan-to-value ratio (LTV) at closing, the base loan divided by the lower of the price or the appraised value. The 1.75% upfront premium was a one-time charge, so the annual premium is the only part left to remove.
How long FHA charges the annual premium
| Down payment at purchase | LTV at closing | Annual premium lasts |
|---|---|---|
| Less than 10% | Above 90% | As long as the FHA loan |
| 10% or more | 90% or less | 11 years, then it stops on its own |
These durations come from HUD's rules for FHA case numbers assigned from June 2013 on, which HUD kept in Mortgagee Letter 2023-05. FHA loans with earlier case numbers follow HUD's older rule, which drops the premium once the balance reaches 78% of the original value on schedule, after at least five years on a 30-year loan. If you bought that long ago, your servicer can confirm the date.
Three ways to end it
Wait out the 11 years. If you put 10% or more down, nothing is required. On a $300,000 home with 10% down, the $112.50 monthly premium stops after payment 132.
Refinance into a Conventional loan. Fannie Mae and Freddie Mac don't require mortgage insurance when the new loan is 80% of the home's value or less. The new appraisal sets the value, so both your payments and any rise in your home's value count toward that 80%. Above 80%, a Conventional loan carries private mortgage insurance priced on your score, and at a strong score that can still cost less than FHA's premium, with an end date.
Refinance into a VA loan. An eligible veteran or service member can refinance an FHA loan into a VA loan, which has no monthly mortgage insurance at any loan-to-value.
Selling the home or paying the loan off ends the premium too.
A worked example after five years
Dana bought a $300,000 single-family home with 3.5% down. The base loan was $289,500, and the 1.75% upfront premium of $5,066.25 brought the loan to $294,566.25 at a 5.75% rate. Principal and interest are $1,719.01 a month. The annual premium started at about $133 a month and, because HUD refigures it on the declining balance, runs about $122 a month in year six.
After 60 payments, Dana's balance is $273,246.10. Here's how two appraisals play out:
| Appraisal at $350,000 | Appraisal at $340,000 | |
|---|---|---|
| 80% of the value | $280,000.00 | $272,000.00 |
| Balance after 60 payments | $273,246.10 | $273,246.10 |
| LTV | 78.1% | 80.4% |
| Room under 80% | $6,753.90 | $1,246.10 short |
| Mortgage insurance on a Conventional refinance | None | None after a $1,246.10 principal payment |
At $350,000, Dana refinances the balance into a Conventional loan with no mortgage insurance, and the roughly $122 monthly premium disappears. At $340,000, paying $1,246.10 toward principal before the refinance closes brings the loan to $272,000, exactly 80%. Closing costs on the refinance are paid in cash or with a lender credit so the new loan stays at or under 80%.
Dana's score matters only for the rate and for qualifying. At 80% LTV or less, Conventional has no mortgage insurance at any score.
If you're not at 80% yet
- Add principal each month. Every extra dollar comes straight off the balance. An extra $150 a month on Dana's loan adds up to $9,000 over five years, plus the interest it saves.
- Get a new appraisal after the home gains value. Florida homes that have gained value can cross 80% years before the payment schedule alone gets there.
- Check your score first. A Conventional refinance starts at 620 at most lenders, and a higher score earns a better price on the new loan.
- Compare a Conventional loan with PMI. At 85% or 90% LTV and a score above 740, the PMI can cost less than FHA's premium and comes off automatically at 78% of the new value.
The mortgage payment calculator shows your payment with and without mortgage insurance at any balance. When you think you're near 80%, call AAA Capital Funding at 888-601-8344 and we'll price the Conventional refinance on your actual balance, score and value.