The FHA Mortgage Insurance Premiums (MIP) aren't as confusing as they may seem. There are two parts to FHA MIP: upfront and annual. The upfront mortgage cost is equal 1.75 of your loan size and is added to the loan and repaid in your monthly mortgage payments just like regular interest. Annual mortgage insurance is paid in 12 installments per year and is also included in the monthly mortgage payments.

You'll only need to keep your FHA MIP until your loan has 78% loan-to-value, meaning that before you own 22% of your home, you'll be required to pay mortgage insurance premiums. Once you reach this benchmark, however, you'll be able to refinance out of the MIP.