What is mortgage insurance and how much does it cost?
Answered by Onias Derilus, Mortgage Capital · NMLS# 1859012 · Florida licensed mortgage broker
Mortgage insurance protects the lender when you put down less than 20%. Conventional PMI runs about 0.3% to 1.5% of the loan per year; FHA charges an upfront 1.75% premium plus an annual premium around 0.55%.
Conventional PMI is removable at 20% equity; FHA's annual premium usually lasts the life of the loan unless you refinance out. We compare the total insurance cost of each program, not just the rate.
What mortgage insurance covers
Mortgage insurance protects the lender if you default. It lets you buy with less than 20% down. Conventional loans call it PMI; FHA has its own version.
Cost varies by loan type, down payment, and credit. It usually runs a fraction of a percent of the loan each year.
Managing the cost in Florida
Mortgage insurance is often temporary. Conventional PMI drops once you hit 20% equity. FHA insurance behaves differently and may last longer.
We show how long you will pay it and how to end it. Bring your numbers and we will map the cheapest path.