MIP is the Mortgage Insurance Premium (similar to PMI on conventional mortgages with a loan-to-value over 80%).  For FHA loans the MIP will be paid regardless of loan-to-value.

As of October 4th 2010 all new FHA loans will have lower upfront and a higher annual MIP charge.  The upfront MIP will be reduces to 1.00% and the annual MIP payment will be increased to 0.85% paid monthly (for purchases and refinances).

In the example I saw: for a $100,000 loan the upfront will be lowered by about $1,250 and the monthly will increase by about $30.

FHA believes this will improve their monthly cash flow by $300 million.