USER QUESTION: What is the difference between PMI and MIP?
Here is a clear understanding of the difference between PMI and MIP on FHA loans! Here's a breakdown of the key points you mentioned:

PMI vs. MIP:

Loan Type: PMI applies to conventional loans, while MIP is for FHA loans.
Down Payment Threshold: PMI is typically required when the down payment is less than 20% of the loan amount. FHA loans require MIP regardless of the down payment (usually at least 3.5%).
Administration: PMI is handled by private mortgage insurers. MIP is managed by the Federal Housing Administration (FHA).
Costs and Premiums:
PMI: Varies depending on loan terms, creditworthiness, and loan-to-value (LTV) ratio. Generally falls between 0.1% and 2% annually. No upfront fee.
MIP: Has two parts - an upfront mortgage insurance premium (UFMIP) of 1.75% of the loan amount (can be financed) and an annual MIP (0.5% to 1.75% based on LTV and loan term).
In essence, PMI offers lenders more flexibility based on borrower's creditworthiness, while MIP has a set structure for FHA loans.
REERENCE:Roberto Pineyro

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