PMI vs. MIP on Florida Mortgages — Differences and How to Remove Them
PMI vs MIP Florida mortgage: what each one costs, when you pay it. How to get rid of mortgage insurance on your Florida home loan.
Educational content only. This article is for informational purposes and does not constitute financial, legal, or lending advice. Loan programs, rates, and eligibility requirements change frequently. Consult a licensed mortgage professional before making any borrowing decision. Mortgage Capital | NMLS# 1859012 | Licensed in Florida.
PMI and MIP are both mortgage insurance, but they work differently and are not interchangeable. Understanding the PMI vs MIP distinction on a Florida mortgage helps you pick the right loan and know when you can drop the extra cost.
What Is PMI
PMI stands for private mortgage insurance. It's required on conventional loans when you put down less than 20%. The cost typically runs 0.5–1.5% of the loan amount per year, added to your monthly payment.
PMI on a Florida conventional loan is cancellable. Once you hit 20% equity — through payments or appreciation — you can request removal. Federal law requires lenders to automatically cancel PMI once you reach 22% equity based on the original purchase price.
What Is MIP
MIP stands for mortgage insurance premium. It applies to FHA loans. MIP has two parts: an upfront premium of 1.75% of the loan amount paid at closing, and an annual premium paid monthly.
The annual MIP rate in 2026 is typically 0.55% for most Florida FHA borrowers with 30-year loans. But unlike PMI, MIP on a recent FHA loan with less than 10% down is permanent unless you refinance.
How to Remove Mortgage Insurance
Removing PMI on a conventional loan is straightforward. Request removal in writing when your balance drops to 80% of the original purchase price. If your home has appreciated, an appraisal can establish the new value and speed up the timeline.
Removing FHA MIP is harder. For loans with less than 10% down, MIP stays for the life of the loan unless you refinance into a conventional. If you've built equity and your credit qualifies, a conventional refinance eliminates MIP entirely.
The cancellation difference is the whole story
Conventional PMI cancels. You can request it at 80% of original value, and it terminates automatically at 78%.
FHA MIP on most current loans does not cancel at all. It runs for the life of the loan.
That single difference is worth more than any rate comparison between the two programs.
The FHA exit is refinancing to conventional once you hold 20% equity.
Upfront costs differ too
FHA charges 1.75% up front, usually financed into the balance.
Conventional has no upfront mortgage insurance premium.
On a $320,000 loan that is $5,600 added to what you owe from day one.
It is invisible at closing because it is financed, which is exactly why buyers miss it.
Which costs less over your actual hold
Under about 660 credit, FHA usually wins on total cost despite MIP.
Above 700, conventional wins clearly, and the gap widens the longer you hold.
Between those, it depends on your down payment and how fast you expect equity to build.
Model both on the PMI calculator and the FHA loan calculator.
Getting PMI removed early
Appreciation counts. A new appraisal showing 80% loan-to-value can cancel PMI years before the amortization schedule would.
Servicers set seasoning requirements, commonly two years, before considering one.
The appraisal costs a few hundred dollars against a saving that can exceed $2,000 a year.
Check your position on the LTV calculator, then request the servicer's requirements in writing.
Lender-paid and single-premium alternatives
Lender-paid PMI removes the monthly line and raises your rate instead. It never cancels.
Single-premium PMI is paid once at closing, sometimes by the seller as a concession.
Both suit a long hold or a quick refinance. Neither suits a borrower who will reach 80% equity soon.
Ask your lender to price all three structures rather than quoting only monthly.
What happens on a refinance
Refinancing an FHA loan to conventional removes MIP permanently, provided you hold 20% equity.
That is the single most common reason Florida owners refinance right now, ahead of rate.
Refinancing FHA to FHA through the streamline keeps MIP in place.
It lowers your rate but does not solve the insurance problem.
Work out which you actually want before you start. They are different transactions.
Which to choose today
Above 700 credit, take conventional and accept removable PMI.
Below 660, FHA usually costs less overall despite the permanent premium.
Between the two, model both with your actual down payment and hold period.
Run them on the PMI calculator and the FHA loan calculator before deciding.
Ten percent down changes FHA
FHA loans with 10% or more down carry MIP for eleven years rather than the life of the loan.
That is a meaningful exception most buyers never hear about.
If you have 10% available, it changes the FHA-versus-conventional comparison considerably.
Ask your lender to price both structures before you decide.
Running the Numbers for Florida Buyers
On a $350,000 loan, FHA MIP adds about $160 per month. PMI on the same balance might add $140–$180 monthly depending on credit. The upfront FHA MIP of 1.75% adds $6,125 rolled into the balance.
The right choice depends on your credit score, down payment, and how long you plan to stay. FHA often wins for scores below 680. Conventional wins for buyers with strong credit who plan to remove PMI in a few years.