It depends on the loan. Conventional loans often require private mortgage insurance below 20% down; FHA has different insurance rules. Compare the cost and conditions for ending coverage, not just the down payment.
Compare what the insurance protects, when it may be required and how it can end. This page does not quote premiums.
Private mortgage insurance protects the lender. On many borrower-paid policies, cancellation may be requested when conditions are met. See the full cancellation rules below.
FHA insuranceFHADifferent upfront and ongoing rules.Details +
FHA generally has upfront and ongoing mortgage insurance. Its ending rules differ from conventional PMI; 20% equity does not automatically end it. See the full duration rules below.
Want to compare the loan numbers too?
Use the FHA and conventional example for down-payment amounts. It does not quote insurance prices.
Could insurance affect upfront costs?
Ask what is due upfront, what is paid over time and what may be added to the loan.
Could your score change the next step?
Loan rules and lender rules can differ. A score alone does not decide approval.
A few good questions
Is this homeowners insurance?
No. They protect different risks.
Does FHA stop at 20% equity?
Not automatically.
Is PMI cancellation automatic at 80%?
No. You generally must request cancellation and meet other conditions. Automatic termination follows separate rules.
What are the full rules for ending mortgage insurance?
For many conventional loans where you pay private mortgage insurance, called PMI, you may ask to cancel it when what you owe reaches 80% of the home value used when the loan began. You generally must be current, have a good payment history, have no second liens and show that the home value has not fallen. A second lien is another loan secured by the home. Automatic termination at the scheduled 78% point follows separate rules and generally requires current payments. For FHA cases assigned on or after June 3, 2013, ongoing insurance generally lasts 11 years if the original loan covered 90% or less of the home value, or the full loan term if it covered more than 90%. Other rules apply. It does not simply stop when you reach 20% equity.
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