FHA Refinance Calculator

FHA Refinance Calculator

FHA MIP: The Hidden Cost That Makes Refinancing Worthwhile

Most FHA homeowners focus only on the interest rate when evaluating a refinance. But the bigger savings opportunity is often the MIP (Mortgage Insurance Premium) — a monthly charge that never stops on loans originated after June 2013 with less than 10% down.

Current FHA MIP Rates (2026)

FHA Streamline vs. Full FHA Refinance vs. FHA-to-Conventional

3 FHA Refinance Scenarios

Scenario 1 — FHA Streamline: Rate drop + MIP reduction

This is the highest-value FHA Streamline scenario. Homeowners who locked in at 7%+ in 2022–2023 and are still paying the old 0.85% MIP rate can save over $200/month with a single Streamline application — no appraisal needed.

Scenario 2 — FHA to Conventional: Escape MIP permanently

Eliminating MIP by switching to conventional is the most powerful FHA refinance move available. The MIP savings alone (~$128–$200/month) often outweigh the entire interest rate differential. If your current LTV is at or below 80%, this path almost always wins over an FHA Streamline.

Scenario 3 — Marginal case: Rate barely moves

A 0.25% rate drop on a current FHA loan barely justifies a Streamline. The FHA's net tangible benefit requirement (typically a 5% reduction in combined P&I + MIP payment, or switching from an ARM) should gate this — lenders often won't approve a Streamline that doesn't clear the threshold. At 0.25%, consider waiting for a larger rate drop.

FHA Streamline Refinance Requirements

• 6-month seasoning: Your current FHA loan must be at least 6 months old and have at least 6 on-time payments.
• No late payments: No 30-day late payments in the past 6 months, no more than one in the past 12 months.
• Net tangible benefit: The new loan must provide a measurable benefit — typically a 5%+ reduction in combined P&I and MIP payment, or moving from an ARM to a fixed-rate loan.
• No cash out: FHA Streamline is rate-and-term only. Maximum cash back at closing is $500.
• No appraisal required: The lender uses the original or most recent appraisal on file, which protects borrowers who owe more than their home's current value.
• Occupancy: You must certify the property is your primary residence (or was at origination for the non-credit qualifying Streamline).

Upfront MIP on a New FHA Loan

Any new FHA loan (including a Streamline) requires an upfront MIP (UFMIP) of 1.75% of the loan amount. On a $280,000 balance, that is $4,900 — typically financed into the new loan rather than paid at closing. The Streamline's net tangible benefit calculation must still hold after this addition to the loan balance.

Frequently Asked Questions

What is an FHA Streamline Refinance?

A simplified refinance exclusively for existing FHA borrowers. It requires no appraisal and minimal income documentation. Eligibility requires 6 months of on-time FHA payments and a net tangible benefit — typically a 5%+ reduction in your combined principal, interest, and MIP payment.

How long do I pay FHA MIP?

For FHA loans originated after June 3, 2013: if your original down payment was less than 10%, you pay annual MIP for the entire life of the loan. If you put 10% or more down, MIP cancels after 11 years. To eliminate it before that, you must refinance to a conventional loan once your LTV reaches 80% or below.

When should I switch from FHA to conventional?

As soon as your LTV (based on a new appraisal) reaches 80% or lower. At that threshold, a conventional loan requires no PMI, so you eliminate the entire MIP cost — often $128–$300/month. Even if the interest rate on the conventional loan is similar to your FHA rate, the MIP elimination typically makes it worthwhile.

What are current FHA MIP rates?

As of 2026, annual MIP for most 30-year FHA loans under $726,200 is 0.55%/yr (LTV ≤ 90%) or 0.50%/yr (LTV > 90%). The upfront MIP (UFMIP) is always 1.75% of the loan amount. These rates were reduced from the prior standard of 0.85% in March 2023.

Am I eligible for an upfront MIP refund when doing an FHA Streamline?

Yes, if you're refinancing within 36 months of your original FHA loan closing. The FHA provides a partial credit on the new UFMIP equal to the unused portion of your original UFMIP — reducing the 1.75% upfront charge on the new loan. The credit is highest in the first months and declines over time. After 36 months, no credit applies and you pay the full 1.75% UFMIP. Your lender will calculate the applicable credit on your Loan Estimate.

What qualifies as "net tangible benefit" for an FHA Streamline?

The FHA defines net tangible benefit as a 5% or more reduction in your combined principal + interest + MIP monthly payment, OR a reduction in the loan term, OR a switch from an adjustable rate to a fixed rate. For most rate-and-term Streamlines, the 5% payment reduction test is the relevant one — enter your current total payment (P&I + MIP) and target it to drop by at least 5% to ensure eligibility.

Can I roll FHA closing costs into the new loan on a Streamline?

Yes, on an FHA Streamline the new loan amount can include the payoff balance, the new UFMIP (financed), and some closing costs — subject to the limit that the new loan cannot exceed the original principal limit for your area. However, you cannot receive cash back at closing on a Streamline; it is strictly rate-and-term. If your closing costs exceed what can be financed, you must pay the remainder at closing or choose a no-cost structure (lender credits at a higher rate).

How to Use the FHA Refinance Calculator

This calculator models both the rate savings and MIP change from an FHA refinance, giving you a combined monthly savings figure that reflects total cost — not just the interest rate reduction.

Step 1 — Enter your current FHA balance and rate

Use the payoff balance from your most recent mortgage statement. Enter the interest rate from your current loan note — if you locked in during the 2022–2023 rate spike, you may be at 7.0%–7.5%, which means significant savings potential.

Step 2 — Enter your current MIP rate

Check your original loan paperwork or servicer statement for your annual MIP percentage. FHA loans originated before March 2023 carry 0.85%/yr (or higher for super-conforming balances). Post-March 2023 loans are at 0.55%/yr for most 30-year loans under $726,200. If you're on the old rate, your MIP savings alone may justify a Streamline.

Step 3 — Choose your refinance path

Select "FHA Loan" to model a Streamline or full FHA-to-FHA refinance (MIP continues). Select "Conventional Loan" to model switching out of FHA entirely — this eliminates MIP if your LTV is 80% or below, and the calculator shows the full payment difference including MIP removal. See our FHA refinance closing costs guide for what to expect on each path.

Step 4 — Enter realistic closing costs

FHA Streamline closing costs typically run $3,000–$5,000 (lender fees, title, UFMIP financed separately). Full FHA-to-FHA or FHA-to-conventional refinances run $5,000–$9,000 with an appraisal. The 1.75% UFMIP on a new FHA loan is usually rolled into the balance — don't include it as a closing cost in the calculator unless you're paying it upfront.

When FHA Refinancing Doesn't Make Sense

• Rate drop under 0.40%: Below this threshold, the FHA's 5% net tangible benefit requirement is rarely met for FHA Streamlines.
• LTV above 80% but close: If you're at 82–85% LTV, waiting 1–2 years to cross the 80% threshold and refinance to conventional could save more than refinancing now and continuing MIP payments.
• Less than 6 payments made: FHA Streamline requires a minimum 6-month seasoning period — you cannot Streamline immediately after your original loan closes.
• Planning to sell within 18 months: With FHA closing costs typically running $4,000–$7,000, you need at least 18–30 months of savings to break even. Short timelines rarely justify the cost.

FHA to Conventional: The Math on When to Switch

The single most impactful decision for FHA borrowers is whether to stay FHA or switch to a conventional loan on the refinance. The right answer depends entirely on your current LTV — a number that shifts as your home appreciates and your balance amortizes.

The 80% LTV Dividing Line

Below 80% LTV (based on a new appraisal), a conventional loan requires no PMI at all. Above 80%, conventional PMI applies — but it's typically cheaper than FHA MIP and, critically, it cancels at 78% LTV by law. FHA MIP (for loans originated after June 2013 with less than 10% down) never cancels.

The Worked Example: $300K FHA at 85% LTV

Scenario: $300,000 FHA balance at 7.0%, MIP rate 0.55%/yr ($137.50/mo). New appraisal shows $353,000 value → LTV = 85%. Refinancing to conventional at 6.5% with PMI:

• New conventional payment (P&I only): $1,896/mo vs. FHA $1,996/mo = $100/mo savings on rate
• PMI at 85% LTV on conventional: ~$90/mo
• Combined conventional payment: $1,986/mo
• FHA total (P&I + MIP): $2,134/mo
• Net monthly savings from switch: $148/mo
• PMI cancels in ~4–5 years as balance drops to 78% LTV
• Savings accelerate after PMI cancellation: +$90/mo additional

The break-even on this switch with $7,000 closing costs: 47 months. After that, pure savings for the life of the loan — including the permanent MIP elimination a conventional loan delivers. Use this calculator's "Switch to Conventional" output to run these numbers for your specific balance and home value.

The 2023 FHA MIP Rate Cut: Are You Still on the Old Rate?

In March 2023, the Biden administration reduced the annual FHA MIP rate from 0.85% to 0.55% for most 30-year loans — a 35% reduction. This cut applied to new originations and streamline refinances but did not automatically apply to existing FHA loans still paying the old rate.

If Your FHA Loan Predates March 2023

You are almost certainly paying 0.85%/yr annual MIP unless you've already refinanced. On a $300,000 balance, that's $212.50/month. At the new 0.55% rate, the same balance costs $137.50/month — a $75/month difference from MIP alone, even before any interest rate reduction.

FHA Streamline: Access the New Rate Without a Full Refinance

An FHA Streamline Refinance lets you capture the new 0.55% MIP rate without a full income qualification or appraisal — provided your rate also drops enough to meet the net tangible benefit test (typically a 5% combined P&I + MIP reduction). If your current FHA rate is 6.5%+, a Streamline at a lower rate plus the MIP drop may produce a 10–15% payment reduction with closing costs under $4,000 and a break-even under 24 months.

Related Calculators & Guides

• Mortgage Savings Calculator — Monthly & Lifetime Savings
• Refinance Break-Even Calculator
• PMI Removal Calculator
• LTV Calculator — Check Your Equity Position
• FHA Streamline Refinance: Complete Guide
• PMI vs. FHA MIP — What's the Difference?
• Full Mortgage Refinance Calculator

Sources & References

• Consumer Financial Protection Bureau (CFPB) — Explore Mortgage Rates
• Freddie Mac Primary Mortgage Market Survey (PMMS)
• Federal Housing Finance Agency (FHFA) — Conforming Loan Limits
• IRS Publication 936 — Home Mortgage Interest Deduction
• U.S. Department of Housing and Urban Development (HUD) — FHA Loan Programs