The “5-year rule” refers to how FHA mortgage insurance (MIP) works on certain loans:
- ✅ If your down payment is < 10% → You must pay FHA mortgage insurance for the full life of the loan (not just 5 years).
- ✅ If your down payment is ≥ 10% → MIP can drop off after 11 years, not 5.
💡 Where the “5-year” idea comes from:
Before 2013, FHA loans let you cancel mortgage insurance after 5 years AND when your loan balance reached 78% of the home’s value. Today, most FHA loans keep MIP much longer unless you refinance to a conventional loan.
📅 FHA Loan 5-Year Rule Explained
- Less than 10% down: Mortgage insurance lasts for the entire loan term.
- 10% down or more: MIP ends after 11 years.
- Old Rule: Before 2013, you could cancel MIP after 5 years + 78% loan-to-value.
💡 Trealtorr Tip: Most buyers refinance into a conventional loan after 2–5 years to drop MIP and lower their payment. 📲 Text us at +1 (347) 831-6085 and we’ll see when you can refinance and save.
🔥 Trealtorr Bottom Line: FHA is great to get you into a home, but you don’t have to keep that higher payment forever — refinancing later can save you big.