Updated November 4, 2026
Every FHA loan in Kentucky carries two kinds of mortgage insurance, no matter how much you put down: an upfront premium of 1.75% of the loan amount, and an annual premium paid monthly. Most buyers putting 3.5% down on a 30-year loan pay 0.55% a year for the life of the loan.
Upfront Mortgage Insurance (UFMIP)
The upfront premium is 1.75% of your base loan amount. Most buyers finance it into the loan rather than paying it at closing. On a $193,000 base loan, it comes to $3,377.50, which would bring the total loan to $196,377.50.
Annual Mortgage Insurance (MIP) Rates
The annual premium depends on your loan term and loan-to-value (LTV). These rates apply to loans of $726,200 or less, which covers every standard Kentucky FHA loan, since the 2026 single-family limit is $541,287 in all 120 counties.
Loan terms over 15 years
| Down payment | LTV | Annual MIP | How long you pay |
|---|---|---|---|
| Less than 5% | Over 95% | 0.55% | Life of the loan |
| 5% to less than 10% | Over 90% up to 95% | 0.50% | Life of the loan |
| 10% or more | 90% or less | 0.50% | 11 years |
Loan terms of 15 years or less
| Down payment | LTV | Annual MIP | How long you pay |
|---|---|---|---|
| Less than 10% | Over 90% | 0.40% | Life of the loan |
| 10% or more | 90% or less | 0.15% | 11 years |
These rates took effect for loans endorsed on or after March 20, 2023, when HUD cut annual MIP by 0.30 percentage points for most buyers. If your FHA loan is older than that, you’re likely paying a higher rate, and a streamline refinance may be worth a look.
What It Costs on a Kentucky Home
Here’s a $200,000 purchase with 3.5% down on a 30-year loan:
- Down payment: $7,000
- Base loan: $193,000
- Upfront premium, financed: $3,377.50
- Annual MIP: $193,000 × 0.55% = $1,061.50 a year, or about $88 a month to start
This is an estimate of the mortgage insurance only. Your full payment also includes principal, interest, taxes and homeowner’s insurance.
How to Get Rid of FHA Mortgage Insurance
- Put 10% or more down and the annual premium ends after 11 years.
- Refinance to a conventional loan once you have enough equity. At 20% equity, a conventional loan generally won’t need mortgage insurance. More on dropping FHA MIP.
- Get back part of the upfront premium if you refinance FHA-to-FHA soon after closing. See how the UFMIP refund works.
Why Pay It at All?
Mortgage insurance is what makes FHA’s flexible rules possible: 3.5% down with a 580 score, and 10% down with a score from 500 to 579. The down payment can come from gift funds or approved assistance such as KHC’s down payment assistance, and the earnest money you’ve paid can count toward it when it’s properly documented. With strong credit and a larger down payment, conventional can cost less, so it’s worth comparing both on the same home.
Frequently Asked Questions
Does every FHA loan have mortgage insurance?
Yes, for purchases. A larger down payment changes the rate and how long you pay, but doesn’t remove it.
Can the seller pay my upfront premium?
Yes. It counts toward the 6% seller contribution limit.
Does FHA MIP go away at 20% equity?
No. That’s a common mix-up with conventional PMI. With less than 10% down, FHA MIP stays for the life of the loan unless you refinance out of FHA.
Source: HUD Mortgagee Letter 2023-05. See the full Kentucky FHA loan requirements.
Want Your Exact FHA Payment?
Call or text Joel Lobb at 502-905-3708, email kentuckyloan@gmail.com, or send me your question here.
Joel Lobb — Mortgage Loan Officer
NMLS #57916 | EVO Mortgage, Company NMLS #1738461
Equal Housing Lender. This information is for educational purposes only and is not a commitment to lend. All loans subject to credit approval, underwriting, property approval, and program guidelines, which can change without notice. Not affiliated with or endorsed by FHA, HUD, or any government agency.
