Mortgage insurance is required on most loans with less than 20% down, and the cost depends on your loan type, credit score, and down payment. Conventional loans charge private mortgage insurance that you can cancel. FHA loans charge two premiums, USDA loans charge two fees, and VA loans charge no monthly mortgage insurance at all. This article lays out the mortgage insurance requirements for each program, runs a worked payment example, and shows how to remove the cost later. Duane Buziak, NMLS #1110647, Coast2Coast Mortgage LLC, NMLS #376205, also uses a NoTouch Credit Pull to compare options before you commit. A NoTouch Credit Pull is a soft credit pull mortgage pre-approval: it reviews your credit without a hard inquiry, so it does not lower your score the way a standard application check can. That lets you see real numbers from several loan types before you decide.
When Is Mortgage Insurance Required?
Mortgage insurance is required on conventional loans when your down payment is under 20%, on nearly every FHA loan regardless of down payment, and on USDA loans through a guarantee fee. VA loans have no monthly mortgage insurance. The terms differ by program, so the definitions matter:
- PMI (private mortgage insurance): the insurance on conventional loans with a loan-to-value (LTV) ratio above 80%. LTV is your loan balance divided by the home’s value.
- MIP (mortgage insurance premium): the FHA version, with an upfront premium and an annual premium billed monthly.
- Guarantee fee: the USDA charge, also split into an upfront fee and an annual fee.
- Funding fee: the VA’s one-time charge. It is not mortgage insurance, and it is not a monthly cost.
The Consumer Financial Protection Bureau explains PMI as coverage that lets lenders accept smaller down payments, with the borrower paying the premium. That points to the most common misconception: mortgage insurance protects the lender, not you. If you default and the home sells for less than you owe, the insurer reimburses part of the loss to the lender. You get no coverage from it. What you get is access to a loan you might not otherwise qualify for with a small down payment.
Two more myths are worth clearing up. First, 20% down is not required to buy a home; it is only the threshold for avoiding PMI on a conventional loan. Second, PMI is not permanent. Conventional PMI can be cancelled, as covered below. FHA premiums are stickier, which is one of the main trade-offs when comparing programs.
How Much Does Mortgage Insurance Cost on Each Loan Type?
Conventional PMI has no single rate, FHA and USDA use published percentages, and VA charges a one-time funding fee instead of monthly insurance. The figures below are as of this writing in October 2026. Confirm them with the source named before relying on them, because agencies adjust them.
Conventional PMI
PMI is priced by the insurer using your credit score, down payment, loan term, and occupancy. A higher score and a larger down payment can cut the annual premium substantially, and the same house can carry very different PMI quotes for two buyers. Insurers and lenders also price differently from one another, which is why quotes should be compared in writing.
FHA
The upfront MIP is 1.75% of the base loan amount, and most borrowers finance it into the loan. The annual MIP is paid monthly. Under HUD’s schedule in effect as of this writing, a 30-year loan at or below the high-balance threshold with 3.5% down carries an annual MIP of 0.55%. With 5% down (LTV above 90% and up to 95%), it is 0.50%. Larger loan balances carry a higher rate. See HUD for the current mortgagee letter and schedule.
USDA
USDA loans carry an upfront guarantee fee of 1.00% and an annual fee of 0.35%, as of this writing. The annual fee is billed monthly. Check the USDA Rural Development guaranteed loan program page for the current fiscal-year numbers, and note that USDA loans also have property location and household income limits.
VA
There is no monthly mortgage insurance. The funding fee for a first-time use with less than 5% down is 2.15% of the loan, falling to 1.5% with 5% to under 10% down and 1.25% with 10% or more, as of the current schedule. Subsequent use with little down is higher. Veterans receiving VA disability compensation, among other groups, are exempt. The VA.gov funding fee page has the full table.
What Does Mortgage Insurance Add to a Monthly Payment? A Worked Example
On a $400,000 purchase with 5% down, mortgage insurance adds roughly $111 to $269 a month on a conventional loan depending on your premium rate, and about $158 a month on an FHA loan. The rates below are hypothetical illustrations, not quotes.
The loan: $400,000 price, $20,000 down, $380,000 loan amount. Monthly PMI is the loan times the annual rate, divided by 12.
- Stronger profile, hypothetical 0.35% annual PMI: $380,000 × 0.0035 = $1,330 a year, or about $111 a month.
- Weaker profile, hypothetical 0.85% annual PMI: $380,000 × 0.0085 = $3,230 a year, or about $269 a month.
The gap is about $158 a month, or $1,900 a year. Over five years before PMI could be removed, that is roughly $9,500 in extra premiums for the same house, which is why a credit score improvement or a slightly larger down payment before you apply can pay off.
Now the FHA comparison with the same $380,000 base loan at 5% down. The upfront MIP is $380,000 × 1.75% = $6,650, which is usually financed, raising the balance to $386,650. The annual MIP at the 0.50% rate (as of this writing, per HUD) is $380,000 × 0.0050 = $1,900 a year, about $158 a month in the first year. FHA can cost less than conventional for a borrower with a lower score and more than conventional for a borrower with a high one, and the upfront premium and the length of the premium both matter. Compare the full picture, not only the monthly figure.
Loan size matters for which program you land in. The FHFA 2026 conforming loan limit is $806,500 for most counties, with a ceiling of $1,249,125 in high-cost areas. Loans above the limit are jumbo loans with their own mortgage insurance rules, and many jumbo programs simply require a larger down payment. See the FHFA for the county-level figures.
How Do You Remove or Avoid Mortgage Insurance?
On a conventional loan you can request PMI cancellation when your balance reaches 80% of the home’s original value, and it must end automatically at 78%. FHA premiums last 11 years or the life of the loan, depending on your down payment. Under the Homeowners Protection Act, as the CFPB describes, you generally need to be current on payments, and the lender may ask for proof that the property has not declined in value or has no junior liens. Automatic termination applies at the scheduled 78% point if you are current. Extra principal payments or a new appraisal showing appreciation can get you there sooner on a request basis, depending on the servicer’s rules.
For FHA loans with case numbers assigned after June 2013, the annual MIP lasts 11 years if the original LTV was 90% or less (10% or more down), and for the life of the loan otherwise. Confirm your case date and terms with HUD or your servicer.
If you want to avoid mortgage insurance in the first place, the options are:
- Put 20% down on a conventional loan.
- Use a VA loan if you are eligible, since there is no monthly mortgage insurance.
- Use a piggyback structure, where a second loan covers part of the down payment. It adds a second payment and usually a higher rate on the second loan.
- Choose lender-paid mortgage insurance, where the insurance cost is built into a higher interest rate. The monthly payment may be lower than with borrower-paid PMI, but you cannot cancel it, so it only makes sense if you expect to sell or refinance within a few years.
- Refinance out of FHA once you reach 20% equity, moving to a conventional loan with no mortgage insurance.
To test a refinance, divide the new closing costs by the monthly savings. Suppose refinancing costs $5,000 and removing $158 a month of mortgage insurance saves $158 net after accounting for any rate change. The break-even is $5,000 ÷ $158 ≈ 32 months. If you expect to keep the home longer than that, the refinance pays for itself. If the new rate is higher than your current one, subtract that extra interest from the savings before dividing.
Why Does Where You Get Your Loan Change Your Mortgage Insurance Cost?
Where you get your loan changes your mortgage insurance cost because PMI pricing and the trade-off between interest rate and PMI differ across lenders and insurers. A broker can request quotes from many sources, while a single retail company shows you its own products. Duane Buziak shops 500+ wholesale lenders per file, so one borrower can see whether a slightly higher rate with lower PMI, or the reverse, produces the lower total cost.
That is the idea behind Dare to Compare, a challenge to compare Duane’s written quote against any other written offer, line by line, including mortgage insurance. It works only when both quotes use the same loan amount, credit score, and down payment.
Comparison shopping has a credit-score concern: a standard application usually triggers a hard inquiry. A NoTouch Credit Pull avoids that. It is a soft-pull pre-approval, meaning a mortgage pre approval without hard pull, so checking your options does not produce a no-credit-hit-mortgage-application tradeoff: it is a no credit hit mortgage application at the pre-approval stage. A soft pull mortgage broker can review your profile, show you PMI, FHA, USDA, or VA scenarios, and let you decide before any formal application requires a hard check. A hard pull is generally required later, when you submit a full application for underwriting.
A note on names: LowerMortgageRates.com is not Lower.com. This site is Duane Buziak’s, a mortgage broker at Coast2Coast Mortgage LLC, and it is unaffiliated with Lower.com, which is a separate company and a direct lender.
For buyers with little down, the programs worth comparing are FHA, USDA (where the property qualifies), down payment assistance (DPA) programs where available, and physician loans for doctors, which often allow low down payments without monthly PMI. Duane offers physician loans through multiple lenders.
How Do Mortgage Insurance Requirements Compare Across Loan Types?
The table below puts the four loan types side by side. Percentages are as of October 2026, from HUD, USDA Rural Development, and VA.gov, and may change.
| Loan type | Minimum down payment | Upfront cost | Monthly cost | How it ends |
|---|---|---|---|---|
| Conventional | As low as 3% on some programs | None, unless lender-paid or single-premium PMI | PMI, priced by score, down payment, and term | Request at 80% LTV; automatic at 78% |
| FHA | 3.5% (credit score requirements apply) | 1.75% upfront MIP (HUD) | Annual MIP, 0.50% to 0.55% on common 30-year scenarios (HUD) | 11 years with 10%+ down; otherwise life of loan |
| USDA | 0% (property and income limits apply) | 1.00% guarantee fee (USDA) | 0.35% annual fee (USDA) | Life of the loan |
| VA | 0% for eligible borrowers | Funding fee; 2.15% first use with under 5% down (VA.gov); exemptions apply | None | Not applicable; no monthly insurance |
The second comparison is about structure, not rates. Check each company’s current practices before you rely on the details.
| Feature | Duane Buziak (broker) | Rocket Mortgage | Movement Mortgage |
|---|---|---|---|
| Loan sources | 500+ wholesale lenders | Its own loan products | Its own loan products |
| Mortgage insurance quotes | Can compare PMI and rate trade-offs across lenders | Quotes come from one company | Quotes come from one company |
| Soft-pull pre-approval | NoTouch Credit Pull | Confirm current policy with the company | Confirm current policy with the company |
Mortgage Insurance FAQ
Is mortgage insurance required with less than 20% down?
Yes, on conventional loans, PMI is generally required when you put down less than 20%. FHA and USDA loans also charge mortgage insurance or guarantee fees regardless of your down payment, while VA loans charge a funding fee instead.
Is mortgage insurance tax deductible?
It may be, but only under current IRS rules, which have changed in recent years. Federal law has recently restored the deduction for certain premiums starting with tax year 2026, with conditions. Confirm eligibility with a tax professional and the IRS.
Can I cancel PMI?
Yes. You can generally request cancellation when your loan balance reaches 80% of the home’s original value, and it ends automatically at 78% if you are current on payments.
Does FHA MIP ever go away?
Only in some cases. For recent FHA loans with 10% or more down, the annual MIP ends after 11 years. With less down, it lasts for the life of the loan, and refinancing into a conventional loan is the usual way out.
Do VA loans require mortgage insurance?
No. VA loans have no monthly mortgage insurance. Most borrowers pay a one-time funding fee, which is not insurance, and some, such as certain disabled veterans, are exempt.
How does credit score affect PMI?
A higher score generally means a lower PMI premium. In the example above, the gap between two hypothetical rates was about $158 a month, or $1,900 a year, on a $380,000 loan.
Is PMI the same as homeowners insurance?
No. PMI protects your lender if you default, while homeowners insurance protects you and the property from damage or loss. You usually need both.
Can I pay mortgage insurance upfront?
Yes, in some cases. Some conventional loans offer single-premium PMI paid at closing, and FHA and USDA charge an upfront premium or fee that can usually be financed. Paying upfront means you cannot get a refund of the unused portion in most cases, so ask before choosing it.
Does a soft credit pull mortgage pre-approval affect my score?
No. A NoTouch Credit Pull is a soft pull, so it is a no hard inquiry mortgage pre approval and does not lower your score the way a hard inquiry can. A hard pull comes later, when you submit a full application.
Is LowerMortgageRates the same as Lower.com?
No. LowerMortgageRates.com is Duane Buziak, a mortgage broker at Coast2Coast Mortgage LLC, and it is unaffiliated with Lower.com, a separate company.
Get Comparable Mortgage Insurance Quotes Before You Choose
Mortgage insurance cost depends on your loan type, credit score, and down payment, so the only reliable way to know what you will pay is to get comparable quotes on the same loan. Ask for the monthly premium, the upfront cost, and when it ends, side by side.
Don’t let uncertainty about mortgage rates cost you thousands, discover your personalized options with a trusted mortgage professional who can compare rates across multiple lenders without impacting your credit score. Schedule your free consultation today and take the first step toward securing the best mortgage solution for your unique financial goals. You can also call 804-212-8663 or start a NoTouch Credit Pull with Duane Buziak at Lower Mortgage Rates by Duane Buziak. Service is available in VA, FL, TN, GA, DC, NC, SC, and MD only.