If you have an FHA loan and you're thinking about refinancing, there's a credit you may be entitled to that a lot of borrowers don't know about until they're already in the middle of the process. It's called the FHA MIP refund — more precisely, an upfront mortgage insurance premium (UFMIP) refund — and depending on when you refinance, it can meaningfully reduce the cost of your new loan. The FHA MIP refund chart tells you exactly how much credit you're entitled to based on how long you've had your current loan. Understanding it before you refinance — not after — is what puts you in a better position to make the right call.

What Is the FHA Upfront MIP and Why Does a Refund Exist?

Every FHA loan requires two types of mortgage insurance: an annual premium paid monthly, and an upfront premium paid at closing. The upfront premium — the UFMIP — is a one-time cost that gets rolled into the loan balance in most cases. According to HUD's Single Family Housing Policy Handbook (HUD Handbook 4000.1), FHA charges an upfront mortgage insurance premium of 1.75% of the base loan amount on most FHA-insured loans.

On a $300,000 loan, that's $5,250 added to your balance at closing. On a $400,000 loan, it's $7,000. It's not a trivial amount.

Because the UFMIP is prepaid insurance covering a loan that may only last a few years before you refinance, HUD allows a partial credit if you refinance into a new FHA loan within 36 months. The logic is straightforward: if the original insurance period is cut short, you shouldn't pay the full premium twice. That credit is what the FHA MIP refund chart tracks.

For more context on how mortgage insurance works in general, the CFPB's overview of mortgage insurance is a helpful starting point — though it focuses mostly on private mortgage insurance (PMI), the underlying concept of prepaid coverage is the same.

The FHA MIP Refund Chart, Month by Month

Per HUD Handbook 4000.1 guidelines, the FHA UFMIP refund begins at 80% if you refinance within the first month after closing and declines to 10% at month 36, with no refund credit available after that point. The refund percentage drops by roughly 2 percentage points per month throughout the 36-month window.

Here are the key benchmarks from the official HUD refund schedule:

For months not listed in the table above — say, month 9 or month 21 — the refund continues its roughly 2% monthly decline between the listed benchmarks. Month 10, for example, falls at approximately 62%: between the month 6 rate (70%) and month 12 rate (58%).

How the FHA MIP Refund Actually Works — It's Not a Check

This is where we see the most confusion, and it matters because it changes what you're actually getting.

The FHA MIP refund is not paid to you in cash. It's not deposited into your bank account, and it doesn't reduce your closing costs as a line-item credit. According to HUD Handbook 4000.1, the UFMIP refund credit is applied directly to the new loan's upfront premium at closing — reducing the amount you owe on the new UFMIP, not adding money to your pocket.

Here's why that matters in practice: when you take a new FHA loan, you owe another 1.75% UFMIP on the new loan amount. The refund credit reduces what you owe on that new premium. If your credit is large enough, it may cover most or all of the new loan's UFMIP. If it's small — say, you're at month 30 with a 22% credit — it just trims the cost slightly.

We've worked with borrowers in Colorado and Florida who came in expecting the refund to help cover closing costs or appraisal fees. That's not how it works. Understanding this upfront shapes your expectations around cash to close and total loan costs before you're already in escrow.

For a broader look at what the refinancing process involves, the CFPB's overview of refinancing covers the overall process well.

How to Calculate Your FHA MIP Refund Amount

The calculation has two parts. First, figure out your refund credit. Second, figure out how that credit applies to your new loan's UFMIP.

Step 1: Calculate Your Refund Credit

Multiply the original UFMIP you paid by the refund percentage from the chart.

Formula: Original UFMIP Amount × Refund % = Refund Credit

Step 2: Calculate the New Loan's UFMIP

Multiply the new loan amount by 1.75% (the standard FHA UFMIP rate). Then subtract your refund credit.

Formula: (New Loan Amount × 0.0175) − Refund Credit = Net UFMIP Owed

Here's a scenario table showing how the refund plays out at different loan sizes and refinance timelines:

You can use our mortgage calculator to model the full monthly payment on your new loan once you know the net UFMIP amount being added to your balance.

Who Qualifies for the FHA MIP Refund

The eligibility rules are straightforward, but they're strict. According to HUD Handbook 4000.1, the FHA UFMIP refund is only available when refinancing an existing FHA-insured loan into a new FHA-insured loan within 36 months of the original loan's closing date.

Here's what that means in practice:

• Your current loan must be FHA-insured. The refund doesn't apply to conventional, VA, or USDA loans.
• Your new loan must also be FHA-insured. If you're refinancing out of FHA into a conventional loan, no refund credit is available — even if you're only 3 months into your FHA loan.
• The refinance must close within 36 months of the original FHA loan's closing date. Day 1 of month 37 means zero credit. There's no grace period on this cutoff.
• The loan must be in good standing. Loans in default or foreclosure typically don't qualify for the standard refund treatment.

HUD doesn't publish a clean breakdown of how many borrowers refinance within FHA versus out to conventional — but the structural reality is telling. Any borrower who waits until they have enough equity to exit FHA entirely forfeits the UFMIP refund by default. On a $300,000 loan, that's up to $3,675 in prepaid premium that simply expires unclaimed.

One scenario we see fairly often: a borrower originally took an FHA loan because their credit score or down payment limited their options, and now — two or three years later — their equity position or credit has improved enough to qualify for a conventional loan. In that case, the lower long-term MIP cost of conventional financing often outweighs the forgone refund credit. It's a legitimate trade-off, but it should be an informed one. Our mortgage refinance page covers those considerations in more detail.

Does Timing Your Refinance Actually Matter?

Yes — though not as the only factor. Because the refund declines approximately 2 percentage points per month, waiting an extra 6 months to refinance costs you roughly 12% of your original UFMIP in lost credit. On a loan where you paid $6,000 in UFMIP, that's $720 in credit you won't get back by waiting from month 12 to month 18.

That said, the MIP refund is one input in the broader refinance math, not the deciding factor. Interest rate savings, closing costs, and how long you plan to stay in the home all carry more weight in most cases. The refund is a tailwind — it reduces the cost of the new UFMIP — but it shouldn't drive the timing of a refinance on its own.

Where timing matters most is right around the 36-month mark. We've seen borrowers assume they had a few extra months when they were actually past the cutoff. Once you're past month 36, you're paying the full new UFMIP with no offset. That's worth knowing before you decide to wait until "next spring."

If you're a Colorado or Florida homeowner evaluating whether now is the right time to refinance your FHA loan, the team at Elevation Mortgage can walk you through the numbers specific to your loan and situation.

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