Mortgage Insurance Premium (MIP)

Mortgage Insurance Premium (MIP) is a type of insurance that protects lenders in case a borrower defaults on their loan. It is commonly required for government-backed loans, such as those from the Federal Housing Administration (FHA), especially when the down payment is less than 20%. MIP can be paid upfront at closing or as a monthly fee added to your mortgage payment. While it increases your overall borrowing costs, MIP helps individuals secure loans that they might not qualify for otherwise, enabling homeownership with a smaller down payment.