Ferrite-coated ferrous powders permit 3D magnetic flux capabilities, lower losses, and structural freedom for state-of-the-art designs of electromagnetic devices as soft magnetic composites (SMCs). Limited by the coating’s inability to withstand high curing temperatures, metal-on-metal contacts emerge, thus increasing losses and efficiency. Ferrite-based coatings are ferrimagnetic, highly resistive, and have high melting temperatures, thus providing adequate electrical barriers between metallic powders. Defect densities and grain sizes can also be controlled to optimize the magnetic permeability and overall resistivity of the iron powder. Fe powders are mechanically milled to induce defects and reduce grain size. A ferrite-based coating is applied and then powders are compacted and cured. Magnetic (VSM) and microstructural (SEM/EDS/EBSD) analysis of pre- and post-milled, coated, compacted, and cured powders allow for the correlation between grain size and defect densities to magnetic permeability and core losses with respect to milling, compacting, and curing.