Mortgage insurance premium (MIP)
Mortgage insurance on FHA loans, made up of an upfront premium usually added to the loan plus an annual premium paid monthly. With less than 10% down, the annual premium lasts for the life of the loan.
Also called: MIP, FHA mortgage insurance, UFMIP, upfront MIP
Related terms
A mortgage insured by the Federal Housing Administration, allowing low down payments and more flexible credit standards. Borrowers pay an upfront and annual mortgage insurance premium, and loan amounts are capped by county.
Insurance that protects the lender on a conventional loan when the down payment is under 20%. The borrower pays for it, usually monthly. It can be removed once equity reaches set levels, and ends automatically at 78% of the original value.
The part of the purchase price you pay in cash rather than borrow. A larger down payment lowers the loan amount and can remove the need for mortgage insurance on a conventional loan.
Replacing your current mortgage with a new one, usually to get a lower rate, change the term, or drop mortgage insurance. It comes with new closing costs, so the savings need to outweigh them.
Short for principal, interest, taxes and insurance, the four parts of a typical monthly mortgage payment. Lenders use PITI, plus any HOA dues or mortgage insurance, to judge whether you can afford the loan.