Does FHA Mortgage Insurance Go Away If You Put More Money Down?
Short answer: yes, but only if you cross one specific line. Most buyers assume the rule is 20 percent down, like it is on a conventional loan. On an FHA loan, the number that actually matters is 10 percent, and it does not erase the insurance. It puts a clock on it.
FHA Has Two Kinds of Mortgage Insurance
FHA loans carry mortgage insurance premiums, or MIP. That is the fee that lets FHA guarantee your loan so a lender can say yes with a lower down payment and a lower credit score.
There are two pieces. The upfront premium is 1.75 percent of your loan amount, and it is almost always rolled into the loan instead of paid at closing. The annual premium is the one you feel. Most borrowers land around 0.55 percent of the loan balance per year, split into twelve pieces and added to your monthly payment.
MIP is not one fee. It is a one time charge plus a monthly one, and only the monthly one can ever go away.
The Number to Remember Is 10 Percent, Not 20
Put down less than 10 percent, and MIP stays on the loan for as long as you have that loan. Put down 10 percent or more, and MIP drops off after 11 years.
So it does go away. You just have to wait for it. Eleven years is a long runway, and most Texas buyers refinance or move well before then. But if you plan to stay put, that is real money back in your pocket in year twelve.
10 percent down converts your MIP from permanent to temporary. There is no down payment that removes it entirely on day one.
This is something we talk through with every client. We keep an eye on our clients' home values so we can flag it when there is an opportunity to refinance out of mortgage insurance. And here is the part a lot of buyers do not know about FHA. The monthly insurance rate is the same regardless of your credit score. That makes it a strong option for buyers whose credit is still building, or whose debt to income ratio runs above conventional limits.
Is Putting 10 Percent Down Actually Worth It?
Not always. On a $350,000 home, moving from 3.5 percent down to 10 percent means bringing about $22,750 more to closing. That cash buys you a smaller loan, a smaller monthly MIP, and the 11 year finish line. It also empties a savings account you might need for a roof or an AC unit in a Texas August.
With the 30 year fixed averaging 6.66 percent the week of July 30, 2026, the smaller loan balance does trim your payment. Run both versions side by side before you decide. Sometimes the right move is keeping the cash and refinancing later.
10 percent down is a trade, not an upgrade. Compare the payment savings against what that cash does for you elsewhere.
If You Have 10 Percent, Price a Conventional Loan Too
Here is the part people miss. Conventional loans use private mortgage insurance instead of MIP, and PMI can be removed once you reach roughly 20 percent equity, either through payments or appreciation. No 11 year wait.
If your credit is strong and you have 10 percent saved, a conventional loan may cost less over time. If your credit is still building, FHA usually wins. It is worth pricing both before you commit.
At 10 percent down you have options. Ask your lender to quote FHA and conventional on the same day.
The Bottom Line
More money down does not make FHA mortgage insurance disappear. It sets an expiration date. Whether that is worth your savings depends on how long you are staying and what else that cash is doing.
If you want to see the actual numbers on your situation instead of guessing, give me a call at 214.673.1319. I will run FHA and conventional side by side so you can see the difference in black and white. You can also reach me anytime at corecommunitymortgage.com. No pressure, just straight answers.