"FHA MIP" is a two-part acronym meaning Federal Housing Administration mortgage insurance premiums. FHA loans are a government-backed mortgage alternative for people unable to meet the 20 percent down payment requirements of a conventional loan. The caveat is that the borrower must pay mortgage insurance.
The FHA operates under the umbrella of the U.S. Department of Housing and Urban Development. The FHA requires just a 3.5 percent down payment, making it more feasible for many aspiring homeowners. MIP offsets the added risk to lenders that issue the loans. As of 2014, MIP typically includes an up-front payment of 1.75 percent of the loan amount as well as annual premiums.