Mortgage Insurance in Kentucky (2026): FHA MIP, PMI, USDA and VA Fees Explained

Updated November 2026 · Reviewed by Joel Lobb, Senior Loan Officer, NMLS #57916, EVO Mortgage

Mortgage insurance protects the lender, not you, when you put less than 20% down. On a $200,000 Kentucky home it typically adds about $58 a month on USDA, about $80 on a 5%-down Conventional loan, and about $88 on FHA. VA loans have no monthly mortgage insurance at all. Conventional PMI can be removed once you reach 20% equity; FHA MIP usually stays unless you refinance.

Mortgage insurance by loan program

Program	Upfront	Monthly / annual	How long it lasts
FHA	1.75% of the loan (usually financed)	0.55% a year on most 30-year loans with under 5% down; 0.50% with 5% or more down	Life of the loan with under 10% down; 11 years with 10% or more down
Conventional (PMI)	None on standard monthly PMI	Roughly 0.2%–1.5% a year, based on credit score and down payment	Removable at 80% loan-to-value on request; drops automatically at 78%
USDA	1% guarantee fee (usually financed)	0.35% a year	Life of the loan
VA	Funding fee: 2.15% first use with under 5% down, 3.3% later use; 1.5% with 5% down, 1.25% with 10% down	None	No monthly mortgage insurance. Funding fee is waived for veterans receiving VA disability compensation

KHC loans follow the first mortgage they're paired with. KHC's Conventional options (HFA Preferred and Freddie HFA Advantage) can carry reduced mortgage insurance for buyers under the income limits.

What it costs on a $200,000 Kentucky home

Program	Down payment	Upfront	Monthly mortgage insurance
FHA	$7,000 (3.5%)	$3,378 financed	About $88
Conventional	$10,000 (5%)	$0	About $80 (at 0.5%; varies with credit)
USDA	$0	$2,000 financed	About $58
VA	$0	$4,300 funding fee financed (first use)	$0

See the full monthly payment for each program with the how much house can I afford calculator.

FHA mortgage insurance (MIP)

Every FHA loan has two pieces: an upfront premium of 1.75% that's added to the loan, and an annual premium paid monthly. For most Kentucky buyers with 3.5% down, the annual rate is 0.55%, about $88 a month on a $193,000 loan. Put 10% or more down and MIP falls off after 11 years; with less than 10% down it stays for the life of the loan. The usual way out is refinancing into a Conventional loan once you have 20% equity.

FHA's mortgage insurance doesn't change with your credit score. That's why FHA is often cheaper than Conventional for scores under about 680, and more expensive above it. More on FHA rules in the Kentucky FHA loan guide.

Conventional PMI

Private mortgage insurance applies to Conventional loans with less than 20% down. The price depends heavily on credit score and down payment. A 760 score with 10% down might pay a few dollars a month per $100,000; a 640 score with 3% down can pay several times that.

• Monthly PMI is the most common and the easiest to remove.
• Single-premium PMI is paid once at closing, sometimes by the seller.
• Lender-paid PMI is built into a slightly higher rate and can't be canceled.

Removing PMI: you can ask to cancel it when your balance reaches 80% of the original value with a good payment history, and it ends automatically at 78%. A new appraisal showing enough appreciation can get you there sooner. Compare FHA and Conventional side by side in Conventional vs FHA vs VA.

USDA guarantee fee

USDA loans charge a 1% upfront guarantee fee (usually rolled into the loan) and a 0.35% annual fee for the life of the loan. It's the cheapest monthly mortgage insurance of any low-down-payment program. See the Kentucky USDA guide for income limits and eligible areas.

VA funding fee

VA loans have no monthly mortgage insurance. Instead there's a one-time funding fee: 2.15% on first use with less than 5% down, 3.3% on later use, and lower with a down payment. Veterans receiving VA disability compensation, eligible surviving spouses and active-duty Purple Heart recipients don't pay it. Details in the Kentucky VA loan guide.

Ways to lower or avoid mortgage insurance

• Use a VA loan if you're eligible.
• Raise your credit score before applying for Conventional. Moving from 660 to 700+ can cut PMI substantially. Try the credit score simulator.
• Put 5% or 10% down instead of 3%. Each step lowers PMI pricing.
• Choose FHA with 10% down if you want MIP to end after 11 years.
• Refinance out of FHA once you reach 20% equity.

Watch: mortgage insurance explained

Not sure where you stand?

Send me your situation and I'll tell you which Kentucky loan fits and what it takes to get approved. Start a free pre-approval review or call or text 502-905-3708.

Frequently asked questions

How much is mortgage insurance on an FHA loan in Kentucky?

FHA charges 1.75% upfront, usually financed, plus an annual premium of 0.55% for most 30-year loans with less than 5% down. On a $200,000 home with 3.5% down that is about $88 a month.

Can I remove FHA mortgage insurance?

If you put 10% or more down, FHA mortgage insurance ends after 11 years. With less than 10% down it stays for the life of the loan, so most borrowers remove it by refinancing into a Conventional loan once they have 20% equity.

When does PMI go away on a Conventional loan?

You can request cancellation when your loan balance reaches 80% of the original home value with a good payment history. It is removed automatically at 78%.

Do VA loans have mortgage insurance?

No. VA loans have no monthly mortgage insurance. They have a one-time funding fee, which is waived for veterans receiving VA disability compensation.

Is USDA mortgage insurance cheaper than FHA?

Yes. USDA charges a 1% upfront guarantee fee and 0.35% a year, compared with FHA's 1.75% upfront and 0.55% a year on most loans.

Free Kentucky homebuyer tools

Credit score simulatorIncome calculatorDTI calculatorKHC DAP calculator

General information, not a commitment to lend. Guidelines change and lenders may add overlays; your approval depends on full credit, income, asset and property review. Joel Lobb, NMLS #57916, EVO Mortgage, Company NMLS #1738461, 10602 Timberwood Cir Ste 3, Louisville, KY 40223. Equal Housing Opportunity.