How to Remove Mortgage Insurance From Your FHA 15+ Year Loan

FHA loans have Mortgage Insurance Premiums (MIP). This is different than the Private Mortgage Insurance (PMI) that can be attached to non-FHA loans. Learn how to get your MIP removed from your 15+ year FHA loan to save yourself some cash each month.

Difficulty: Moderately Easy

Instructions

Things You'll Need:

• Persistence
• Mortgage documents
• A letter
• Patience

1. Review your loan documents. Make sure you have an 15+ year FHA loan. If you don't this article does not apply to you.
   
   If your FHA loan closed January 1, 2001 or later you will have the ability at some point to remove the MIP. If your loan closed before January 1, 2001, you are stuck with the MIP until you pay off the loan or refinance it.

2. Realize that if your loan is following the normal amortization schedule (you are making the required payments and no overpayment each month) your MIP will, in most cases, fall off once you have met the following two requirements: pay MIP for 5 full years and have a 78% loan to value ratio.

3. Determine if you have met the requirements to remove MIP. If you have accelerated your mortgage payments to pay off your mortgage more quickly, you will need to request that the MIP be removed.
   
   In order to remove MIP from your 15+ year FHA mortgage, you must meet some qualifications. You must have paid the MIP for 5 years, your loan to value ratio must be 78% or lower and you must not have been more than 30 days late on any mortgage payment in the last 12 months.

4. If you meet these qualifications, submit a request, in writing, to your mortgage company. Indicate that you believe you have met the FHA requirements for removing MIP and that you would like it removed. Request that the mortgage company follow up with you in writing regarding your request. It is advisable to send your letter with some kind of "proof of delivery".

5. Wait. When the mortgage company receives your letter they will review the information about your loan and payment history and determine whether or not you qualify for MIP removal. If they determine you qualify for the MIP removal, they will send your request to FHA and they will process the approval to have the MIP removed. This process takes time, 2-3 months in some cases.

6. If your request is approved, you can start enjoying having a little extra cash each month! If your request is not approved, find out what steps you need to take to get the MIP removed from your mortgage and develop a plan to get there.

Tips & Warnings

• If your mortgage company's review of your account shows you do not qualify for MIP removal, call the phone number listed in the letter and ask them why and if removal of the MIP is important to you, create a plan to get to qualifying for the removal.
• Sometimes, after you have paid your MIP for 5 years you may not be at a 78% loan to value ratio. In this case, you can remove your MIP by refinancing to a mortgage that does not require MIP ~or~ you can make a lump sum principal payment to get your loan to the 78% loan to value ratio.
• If your bank refuses to remove the MIP and you are sure you meet the FHA requirements to have it removed, call FHA at 1.800.CALLFHA. They will verify that you qualify and work with your bank to help you get it removed.
• You cannot submit a new appraisal to your mortgage company to prove that your loan to value ratio is 78% or lower. FHA only considers the appraised value of your home at the time you bought it. Don't waste your money on a new appraisal!

Resources

• FHA MIP information

[oterri]

on 12/30/2009 great article! I return all rate read and recommend favors

[beckylyn]

on 10/22/2009 you have to pay for 5 years whether or not you're at 78% with an fha loan.
@f1rst, please research FHA MIP. it doesn't protect the borrower AT ALL. it protects the BANK from the BORROWER defaulting. it will NOT save your house if you go in to foreclosure or can't pay your bill.

[thefirstwml]

on 9/17/2009 What if you've managed to get your LTV ratio
at or below 78% in less than 5 years? Can you still get the MIP removed or do you have to wait for the full 5 years?

[f1rst]

on 8/7/2009 Great advice, but think carefully before removing FHA MIP. It protects you should you become delinquent or in default with your mortgage during these troubled financial times. FHA MIP can protect you from loosing your home/mortgage. Having no mortgage insurance is truly risky during these times. Just think about it!

[betterbody]

on 4/14/2009 Great info. Everyone should know How to Remove Mortgage Insurance From Your FHA 15 Year Loan. 5*s and a recommend.