---
title: What is the main difference between mortgage insurance for Conforming loans vs. FHA loans?
description: The main difference between mortgage insurance (MI) on a Conforming (PMI) and FHA (MIP) loan is that MI lasts the life of the FHA loan; PMI does not.
---

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# What is the main difference between mortgage insurance for Conforming loans vs. FHA loans?

## The difference between mortgage insurance on a Conforming loan vs. FHA loan is the duration of mortgage insurance.

The difference is the duration of mortgage insurance.

Mortgage Insurance (or MI) is an insurance policy that protects the [loan servicer](https://www.jvmlending.com/glossary/?__hstc=233546881.dac7ec8c864f90edd9f98c7488ff5587.1672873989960.1672873989960.1672944394628.2&__hssc=233546881.1.1672944394628&__hsfp=4138758479#loanservicer) from any losses that could potentially result from a borrower [defaulting](https://www.jvmlending.com/glossary/?__hstc=233546881.dac7ec8c864f90edd9f98c7488ff5587.1672873989960.1672873989960.1672944394628.2&__hssc=233546881.1.1672944394628&__hsfp=4138758479#default)on their mortgage loan.  Since the [2008 financial crisis](https://www.investopedia.com/articles/economics/09/financial-crisis-review.asp), **mortgage insurance is required on certain loan products, such as all FHA loans and any Conforming loans that exceed an 80% [loan-to-value (LTV) ratio](https://www.jvmlending.com/glossary/?__hstc=233546881.dac7ec8c864f90edd9f98c7488ff5587.1672873989960.1672873989960.1672944394628.2&__hssc=233546881.1.1672944394628&__hsfp=4138758479#ltv-cltvloan-to-value-combinedloan-to-valueratio) at the time of purchase.**

When associated with FHA financing, mortgage insurance is referred to as the **Mortgage Insurance Premium** (or MIP). When associated with Conforming financing, mortgage insurance is referred to as **Private Mortgage Insurance** (or PMI).  **MIP is required throughout the life of the FHA loan; PMI may eventually be removed from the Conforming loan** via refinance, paying down the loan's principal balance to an 80% loan-to-value ratio, or natural amortization to a 78% loan-to-value ratio.

FHA financing also carries [Upfront Mortgage Insurance Premium](https://www.jvmlending.com/glossary/#mortgageinsurancepremiummipandupfrontmortgageinsuranceufmip) (UFMIP). UPFMIP is typically financed by adding it on top of the [base loan amount](https://www.jvmlending.com/glossary/#baseloanamount); however, UFMIP can also be paid in cash at closing. It is calculated at 1.75% of the base loan amount.  

The "PMI factor" used to calculate how much mortgage insurance is required for a Conforming loan is dependent on the borrower's credit score and down payment percentage. **The higher the credit score and down payment, the lower the monthly mortgage insurance.**

**Mortgage insurance is paid on a monthly basis for FHA loans and is usually paid on a monthly basis for Conforming loans.** However, mortgage insurance can also be paid in full at closing for a Conforming loan.  This "**single-premium**" MI requires one lump sum payment as a closing cost and removes the need for subsequent monthly MI payments. However, the amount of single premium MI due at closing is typically higher than the total amount of MI a borrower will actually spend if paying every month because most borrowers will remove PMI (via refinance or extra principal payments) before it's scheduled to naturally fall off the loan. 

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