Mortgage Insurance
Lending & MortgagesInsurance protecting the lender if the borrower defaults, required when the down payment is less than 20% of the home price.
Example
Example: On a $350,000 conventional loan with 5% down ($332,500 loan), PMI costs approximately $140/month at a 0.5% annual rate. You pay this for about 7 years until your equity reaches 20% ($70,000). Total PMI cost: approximately $11,760. An FHA loan on the same amount charges 0.85% MIP ($235/month) for the life of the loan — over $84,600 total.