While not technically private mortgage insurance (PMI), FHA loans do require borrowers to pay what's called a mortgage insurance premium (MIP).
Similar to the USDA loan, FHA loans require two forms of mortgage insurance: an upfront fee that may be financed into the entire loan amount and an annual fee that is paid monthly and re-calculated once a year based on your loan-to-value ratio.
The upfront fee, commonly referred to as the FHA funding fee, is paid at closing and equal to 1.75% percent of the total loan amount. The annual MIP ranges from .4% to .75% of the loan amount, depending on loan type, loan amount and down payment. For most FHA borrowers, the annual MIP is .55%.
