Mortgage Insurance

Mortgage insurance protects lenders against losses when borrowers default. Different loan types have different mortgage insurance requirements. Understanding these costs helps you choose the right loan and budget properly.

Types of Mortgage Insurance

  • PMI (Private Mortgage Insurance): Required on conventional loans with less than 20% down
  • FHA MIP (Mortgage Insurance Premium): Required on all FHA loans regardless of down payment
  • VA Funding Fee: One-time fee for VA loans (some veterans exempt)
  • USDA Guarantee Fee: Annual fee for USDA loans

Comparing Costs

PMI typically costs 0.5-1% annually. FHA MIP ranges from 0.45-1.05% depending on loan terms. VA funding fee is 1.25-2.4% depending on service and down payment. USDA guarantee fee is 1% upfront plus 0.35% annually.

When Mortgage Insurance Applies

PMI applies to conventional loans with LTV above 80%. FHA MIP applies to all FHA loans for the life of the loan (if less than 10% down) or 11 years (if 10%+ down). VA and USDA fees vary but are ongoing for USDA.