FHA mortgage insurance (MIP) lasts the life of the loan when you put down less than 10%; conventional PMI drops off at 78% LTV. Once your DC home is worth enough that the balance is 80% or less of its value, a refinance into a conventional loan removes the MIP for good.
What FHA mortgage insurance costs
FHA MIP has two parts:
- Upfront MIP: 1.75% of the loan amount, which can be rolled into the loan
- Annual MIP: 0.55% of the loan balance per year on a 30-year FHA loan of $726,200 or less with 3.5% down (HUD Mortgagee Letter 2023-05), paid monthly
The annual MIP builds no equity, and on a loan with less than 10% down it runs until the loan is paid off or refinanced.
Requirements to refinance from FHA to conventional without PMI
To refinance from FHA to conventional without PMI, you need:
20% equity
Your home must be worth enough that your remaining loan balance is 80% or less of the current value.
Example:
- Original purchase price: $450,000
- Original FHA loan: $435,000 (3.5% down)
- Current balance: ~$410,000
- Current appraised value: $525,000
- Current LTV: 78%, which qualifies
Minimum credit score
Conventional loans require a 620 minimum credit score. Loan-level price adjustments get smaller as the score rises above 700.
Stable income
Standard employment and income verification applies, same as any refinance.
What the refinance changes and what it costs
The refinance changes two things. First, it removes the 0.55% annual MIP, which a conventional loan at 80% LTV or below does not charge. Second, it replaces your FHA rate with today's conventional rate, which can be higher or lower than the rate you have now. Compare both before you decide.
The costs are title, appraisal and lender fees. DC recordation tax does not apply to a rate-and-term refinance when the ROD 21 exemption affidavit is filed at closing.
Enter your current loan on the savings calculator to compare, and see today's rates.
Estimate your home's value first
Check recent sales of similar homes on your block, or ask your loan officer for a value estimate. The appraisal sets the value, so start with a realistic estimate before anyone orders one.
Options below 20% equity
If the appraisal comes in short of 20% equity, you have three options:
- Pay down the difference: A lump-sum principal payment before refinancing can bring the balance to 80% of the value
- Conventional with PMI: Conventional PMI is priced by credit score and costs less than FHA MIP at higher scores, and it drops off automatically at 78% LTV
- Wait: If home values in your neighborhood rise, a later appraisal may reach 80% LTV
Steps to refinance from FHA to conventional
- Check your equity: Use recent comparable sales in your neighborhood to estimate your home's value
- Get quotes: Compare Loan Estimates on APR and total cost
- Order the appraisal: The lender arranges a formal appraisal to confirm your home's value
- Lock your rate: Once you're satisfied with the terms, lock in your rate
- Close: Sign documents, pay closing costs, and the MIP stops
Seasoning requirements
Some lenders require 6–12 months of payments on an FHA loan before refinancing it into conventional; Fannie Mae and Freddie Mac do not for a rate-and-term refinance. If you bought recently, ask your loan officer whether the lender on your refinance applies one.
See the free savings analysis or get pre-qualified. It takes two minutes and there is no credit pull.
