What type of insurance is required on FHA insured loans?

FHA insured loans require a Mortgage Insurance Premium (MIP). This insurance is essential because it protects the lender in case the borrower defaults on the loan. MIP is a requirement for all FHA loans and can be paid either upfront at closing or as part of the monthly mortgage payment.

In comparison to other types of insurance, such as Private Mortgage Insurance (PMI), which is typically required for conventional loans with a down payment of less than 20%, MIP specifically applies to FHA loans and serves a different purpose. Property insurance is also important for homeowners to protect against risks like fire and theft, but it is not mandated as part of the FHA loan requirements. Similarly, while lender insurance against default could be a consideration, MIP is the specific insurance type that FHA borrowers must focus on.