How much does mortgage insurance cost ? The cost depends on the loan type, down payment, loan amount, credit score, loan-to-value ratio, property type, occupancy, mortgage insurance structure, and lender or program guidelines.
The simple answer:
Mortgage insurance cost can range from a monthly private mortgage insurance charge on a conventional loan to upfront and annual mortgage insurance premiums on FHA loans, USDA guarantee fees, or a VA funding fee for many VA borrowers. For conventional PMI, consumer finance sources commonly cite a broad average range around 0.46% to 1.50% of the original loan amount per year, but your actual PMI cost can be lower or higher depending on your full mortgage profile.
The Consumer Financial Protection Bureau explains that private mortgage insurance rates vary by down payment amount and credit score, and that mortgage insurance may be included in the monthly payment, closing costs, or both.
Important note: This article is for informational purposes only and is not a quote, payment estimate, advertisement, or commitment to lend. Mortgage insurance cost, PMI cost, FHA mortgage insurance premium, USDA guarantee fees, VA funding fee, rates, APR, payment estimates, loan approval, down payment, seller credits, lender credits, closing costs, cash to close, mortgage insurance cancellation, property eligibility, appraisal results, and closing timelines depend on borrower qualifications, credit profile, income, debts, assets, down payment, loan-to-value ratio, loan amount, property details, occupancy, loan program, lender guidelines, underwriting, investor requirements, mortgage servicer rules, and current program requirements.
Key Takeaways The cost of mortgage insurance depends on the loan type and borrower profile. For conventional loans, PMI cost often depends on credit score, down payment, loan amount, loan-to-value ratio, property type, and occupancy. CFPB says PMI rates vary by down payment amount and credit score, and most private mortgage insurance is paid monthly with little or no initial payment required at closing. A recent Experian consumer finance summary citing Urban Institute’s Housing Finance Policy Center states that PMI for conventional mortgages generally costs about 0.46% to 1.50% of the loan amount per year. FHA loans do not use PMI. They use FHA mortgage insurance premium, often called MIP. HUD materials state the upfront FHA mortgage insurance premium is 1.75% of the base loan amount, with annual MIP also applying to most FHA loans. VA loans do not have monthly mortgage insurance, but many borrowers pay a one-time VA funding fee unless exempt. VA says the fee helps lower the program cost because VA loans do not require down payments or monthly mortgage insurance. Mortgage insurance can make lower down payment financing possible, but it increases the cost of the loan. The right comparison should include rate, APR, mortgage insurance, closing costs, cash to close, and long-term cost. What Is Mortgage Insurance Cost? Mortgage insurance cost is the amount a borrower may pay for mortgage insurance, mortgage insurance premium, guarantee fee, or program funding fee connected to a home loan.
The cost may appear as:
Monthly PMI Upfront PMI Split-premium PMI Lender-paid mortgage insurance FHA upfront mortgage insurance premium FHA annual mortgage insurance premium USDA upfront guarantee fee USDA annual fee VA funding fee A higher rate or pricing adjustment in some no-monthly-PMI structures Mortgage insurance usually protects the lender or loan program, not the borrower.
It may help eligible buyers qualify with a lower down payment, but it also increases the overall cost of the mortgage.
Borrowers who want to understand the broader purpose, payment structures, and loan-program differences can first review how mortgage insurance works.
How Much Is Mortgage Insurance? How much is mortgage insurance? It depends on which loan program you use.
Loan Type
Common Mortgage Insurance or Fee
Cost Structure
Conventional loan PMI, if required Often monthly; may also be upfront, split, or lender-paid FHA loan FHA MIP Usually upfront plus annual MIP paid monthly USDA loan USDA guarantee fees Usually upfront plus annual fee VA loan VA funding fee One-time fee for many borrowers; no monthly mortgage insurance Jumbo loan Varies by lender Depends on lender and loan structure Non-QM loan Varies by investor Depends on investor and program guidelines
There is no single mortgage insurance cost that applies to every buyer.
A borrower with strong credit and a larger down payment may have a different PMI cost than a borrower with lower credit and a smaller down payment.
Average Cost of Mortgage Insurance The phrase average cost of mortgage insurance can be misleading because mortgage insurance is not one universal product.
For conventional PMI, a recent Experian article citing Urban Institute’s Housing Finance Policy Center states that PMI generally costs 0.46% to 1.50% of the loan amount per year.
That range is useful for education, but it is not a quote.
Your actual PMI cost may vary based on:
Credit score Down payment Loan amount Loan-to-value ratio Property type Occupancy Loan term Number of borrowers Debt-to-income ratio Mortgage insurer pricing Lender and investor guidelines Simple PMI Cost Formula Educational formula only: This is not a quote, approval, payment estimate, advertisement, or commitment to lend.
A simple way to understand annual PMI is:
Loan amount × annual PMI rate = estimated annual PMI
Then:
Estimated annual PMI ÷ 12 = estimated monthly PMI
For example, if a borrower had a hypothetical annual PMI rate, the monthly cost would depend on the loan amount and the exact PMI factor.
The only reliable way to know your PMI cost is to compare actual loan options based on your credit, down payment, property, loan amount, and lender pricing.
How Much Is PMI on a Mortgage? How much is PMI on a mortgage? PMI on a conventional mortgage commonly depends on your down payment, credit score, and loan-to-value ratio.
CFPB says private mortgage insurance rates vary by down payment amount and credit score.
Common PMI Cost Factors Factor
Why It Matters
Credit score Stronger credit may reduce PMI cost Down payment More down may reduce PMI cost Loan-to-value ratio Higher LTV usually increases risk Loan amount Larger loans can create higher dollar cost Property type Condo, 2–4 unit, or investment property may differ Occupancy Primary residence may price differently from investment property Loan term Some pricing may vary by term Mortgage insurer Different insurers may price differently Lender guidelines Lender or investor overlays can affect options
PMI Cost Example Hypothetical example only: This example is for educational purposes only and is not a quote, approval, payment estimate, advertisement, or commitment to lend. Actual PMI, rates, APR, payment, closing costs, and loan terms depend on borrower qualifications, property details, lender guidelines, underwriting, and market conditions.
If a conventional PMI rate were expressed as an annual percentage of the loan amount, a borrower could estimate the yearly PMI cost by multiplying the loan amount by that PMI rate.
For example:
Annual PMI Rate
Approximate Annual PMI Cost Per $100,000 Borrowed
0.46% $460 0.75% $750 1.00% $1,000 1.50% $1,500
This table is only a math illustration.
It does not represent a Loan Factory quote, lender quote, approval, or actual PMI offer.
Cost of Mortgage Insurance by Loan Type Mortgage insurance cost changes significantly by loan type.
Conventional PMI Conventional PMI may be required when the borrower puts less than 20% down on a conventional loan.
CFPB says PMI may be required when a borrower takes out a conventional loan with a down payment of less than 20% of the purchase price.
PMI may be:
Monthly borrower-paid PMI Upfront PMI Split-premium PMI Lender-paid mortgage insurance Single-premium PMI Monthly borrower-paid PMI is common because it is easier to compare and may be removable later if requirements are met.
Borrowers comparing PMI can review our conventional home loan guide to understand common down payment, eligibility, and qualification requirements.
FHA Mortgage Insurance Cost FHA loans use mortgage insurance premium, often called MIP.
FHA MIP is different from conventional PMI.
HUD materials state that FHA upfront mortgage insurance premium is 1.75% of the base loan amount, and that annual MIP applies to most FHA mortgages.
FHA MIP may include:
FHA Cost
How It Works
Upfront MIP Paid at closing or financed into the loan if allowed Annual MIP Paid in monthly installments
FHA may be a strong option for borrowers who need more flexible credit or underwriting guidelines.
But FHA MIP can affect both monthly payment and total cost.
Borrowers can review FHA mortgage insurance for a deeper look at upfront MIP, annual MIP, and how long FHA mortgage insurance may apply.
USDA Mortgage Insurance Cost USDA loans do not use conventional PMI.
USDA guaranteed loans generally use guarantee fees instead.
USDA’s Single Family Housing Guaranteed Loan Program helps approved lenders provide loans for eligible low- and moderate-income households to purchase eligible primary residences in eligible rural areas. USDA program materials also describe upfront and annual guarantee fees for guaranteed loans.
USDA costs may include:
USDA Cost
How It Works
Upfront guarantee fee May be paid at closing or financed, depending on program rules Annual fee Often paid monthly as part of the mortgage payment
USDA can be helpful for eligible buyers and properties, but it depends on location, income limits, credit, property eligibility, and lender guidelines.
Borrowers considering rural financing can review USDA home loans for additional information about borrower eligibility, property requirements, and program guidelines.
VA Funding Fee VA loans do not have monthly mortgage insurance.
However, many VA borrowers pay a VA funding fee unless exempt.
VA says the funding fee is a one-time payment on a VA-backed or VA direct home loan, and that it helps lower the cost of the program because VA loans do not require down payments or monthly mortgage insurance.
VA also says the funding fee is a percentage of the loan amount and may vary based on loan type, military category, whether it is the borrower’s first or subsequent VA loan use, and whether the borrower makes a down payment.
VA may be a strong option for eligible borrowers, but funding fee, entitlement, property eligibility, and closing costs should still be reviewed.
Eligible borrowers can review VA mortgage insurance for a closer look at how VA loans handle mortgage insurance and the VA funding fee.
Monthly Mortgage Insurance vs Upfront Mortgage Insurance Mortgage insurance cost may be paid monthly, upfront, or both.
Payment Type
What It Means
Common With
Monthly PMI Added to monthly payment Conventional loans Upfront PMI Paid at closing Some conventional structures Split PMI Part upfront, part monthly Some conventional structures Lender-paid MI Cost built into loan pricing Some conventional structures Upfront MIP FHA cost at closing or financed FHA loans Annual MIP FHA monthly mortgage insurance FHA loans Upfront guarantee fee USDA cost at closing or financed USDA loans Annual fee USDA monthly program fee USDA loans Funding fee One-time VA fee for many borrowers VA loans
A lower monthly payment is not always the lowest-cost option.
An upfront cost may reduce the monthly payment but increase cash to close or the financed loan amount.
Borrowers comparing upfront mortgage costs can review cash to close vs. closing costs to understand how these costs differ from the total funds required at settlement.
A lender-paid option may remove the visible monthly PMI line, but it may come with a higher rate.
What Affects the Cost of Mortgage Insurance? Mortgage insurance cost can change based on several factors.
1. Down Payment A larger down payment usually means lower loan-to-value risk.
That may reduce PMI cost on conventional loans.
2. Credit Score CFPB says private mortgage insurance rates vary by credit score.
A stronger credit score may help reduce PMI cost.
3. Loan-to-Value Ratio Loan-to-value, or LTV, compares the loan amount to the home value or purchase price, depending on program rules.
Higher LTV usually means more risk.
More risk can mean higher mortgage insurance cost.
Borrowers can review the loan-to-value ratio to understand how LTV is calculated and why it can affect mortgage insurance and loan pricing.
4. Loan Type Conventional, FHA, USDA, VA, Jumbo, and Non-QM loans use different cost structures.
A conventional PMI quote is not the same as FHA MIP or USDA guarantee fees.
5. Property Type A single-family primary residence may have different pricing than a condo, 2–4 unit property, second home, or investment property.
6. Occupancy Primary residence, second home, and investment property scenarios can price differently.
7. Loan Term Loan term can affect mortgage insurance pricing and total cost.
A 30-year loan may not price the same as a 15-year loan.
8. Mortgage Insurance Structure Borrower-paid PMI, lender-paid MI, upfront PMI, split PMI, and single-premium PMI can create different short-term and long-term costs.
Is Mortgage Insurance Required? Mortgage insurance may be required depending on your loan type and down payment.
Scenario
Mortgage Insurance or Fee
Conventional loan with less than 20% down PMI may be required Conventional loan with 20% down PMI may not be required if guidelines are met FHA loan FHA MIP generally applies USDA loan USDA guarantee fees may apply VA loan No monthly mortgage insurance, but funding fee may apply unless exempt Jumbo loan Depends on lender Non-QM loan Depends on investor
The phrase “mortgage insurance required” does not mean the same thing for every loan program.
Always ask which type of mortgage insurance or fee applies.
Can Mortgage Insurance Be Removed? It depends on the loan type.
Conventional PMI Conventional PMI may be removable.
CFPB says borrowers can request PMI cancellation when the mortgage principal balance is scheduled to reach 80% of the original home value. CFPB also says PMI must be automatically canceled when the principal balance is scheduled to reach 78% of the original value, if the borrower is current.
FHA MIP FHA mortgage insurance follows FHA rules.
Some FHA borrowers compare refinancing into a conventional loan if they qualify and want to remove FHA mortgage insurance.
USDA Fees USDA guarantee fees follow USDA program rules and are not removed like conventional PMI.
VA Funding Fee The VA funding fee is not monthly mortgage insurance.
It is a one-time cost for many borrowers unless exempt.
Homeowners can review our complete guide on how to remove mortgage insurance for a closer look at PMI cancellation and how removal rules differ across mortgage programs.
How to Lower Mortgage Insurance Cost You may be able to reduce mortgage insurance cost by comparing loan options carefully.
Possible strategies may include:
Strategy
How It May Help
Improve credit score before applying May reduce conventional PMI cost Increase down payment May reduce PMI or avoid it if 20% down Compare Conventional vs FHA One may have lower total cost Review VA eligibility VA has no monthly mortgage insurance Review USDA eligibility USDA does not use conventional PMI Ask about HomeReady or Home Possible Some affordable conventional options may offer favorable MI features Compare borrower-paid vs lender-paid MI Different structures may fit different timelines Compare multiple lenders Pricing and options may vary Plan for PMI removal Conventional PMI may be cancellable later
Fannie Mae’s HomeReady product matrix describes HomeReady as affordable conventional financing with cancellable mortgage insurance, subject to restrictions, and up to 97% loan-to-value financing.
This is why loan program comparison matters.
Eligible borrowers can also compare no PMI mortgage programs to understand which loan structures may avoid separate monthly private mortgage insurance and what tradeoffs may apply.
Mortgage Insurance Cost Example: How to Compare Options Hypothetical example only: This example is for educational purposes only and is not a quote, approval, payment estimate, advertisement, or commitment to lend. Actual rates, APR, PMI, FHA MIP, USDA fees, VA funding fee, payment, closing costs, cash to close, and loan terms depend on borrower qualifications, property details, lender guidelines, underwriting, and market conditions.
A buyer with less than 20% down may compare:
Loan Option
Mortgage Insurance or Fee Cost to Review
Conventional with PMI Monthly PMI and PMI cancellation path FHA loan Upfront MIP and annual MIP USDA loan Upfront guarantee fee and annual fee VA loan Funding fee, if applicable Conventional with more down Lower PMI or no PMI if 20% down Lender-paid MI Higher rate or pricing tradeoff Piggyback loan Second mortgage payment and terms
The buyer should compare:
Rate APR Monthly payment PMI or MIP Upfront fees Closing costs Cash to close Long-term cost PMI cancellation option Refinance plan Reserves after closing The lowest monthly mortgage insurance cost is not always the best loan.
The right comparison depends on the borrower’s full financial picture.
What We See in Real Buyer Reviews At Loan Factory, buyers often ask, “How much is mortgage insurance?” because they want to understand the true monthly cost of buying a home.
That is the right question.
But the stronger question is:
How does mortgage insurance change my total payment, cash to close, and long-term cost compared with other loan options?
Here are common situations we see:
A buyer compares conventional PMI with FHA MIP and finds that the better option depends on credit score, down payment, and payment structure. A buyer has enough for 20% down but may not want to use all available savings before moving. A buyer chooses a lower down payment with PMI to preserve emergency reserves. A buyer with VA eligibility avoids monthly mortgage insurance but still reviews the funding fee. A buyer considers USDA because the property may be eligible, but still compares the guarantee fee and annual fee. A buyer chooses conventional PMI because PMI may be removable later. A buyer focuses only on interest rate and forgets to compare mortgage insurance cost. Mortgage insurance is one piece of the loan.
It should always be reviewed with the full payment and cost structure.
Mortgage Insurance Cost Checklist Use this checklist before choosing a loan.
Question
Why It Matters
Is mortgage insurance required? Confirms whether cost applies What type of mortgage insurance is it? PMI, FHA MIP, USDA fee, or VA funding fee How much is the monthly cost? Affects affordability Is there an upfront cost? Affects cash to close or loan amount Can the upfront cost be financed? May increase loan balance Can mortgage insurance be removed later? Important for long-term planning What is the APR? Helps compare total cost What is the full monthly payment? Shows real affordability What is the cash to close? Shows upfront funds needed Would a higher down payment reduce the cost? May improve loan structure Are VA or USDA options available? Could change mortgage insurance structure Are HomeReady or Home Possible available? May help eligible buyers compare MI features How long do you plan to keep the loan? Affects upfront vs monthly cost decision
The right answer is rarely one number.
It is a comparison.
Common Mistakes to Avoid Mistake 1: Asking Only for the Average Cost of Mortgage Insurance Average ranges are useful, but your actual cost depends on your credit, down payment, loan amount, property, occupancy, and loan program.
Mistake 2: Confusing PMI With FHA MIP PMI applies to conventional loans.
FHA loans use mortgage insurance premium.
Mistake 3: Thinking No PMI Means No Cost A no-PMI option may still have a VA funding fee, USDA guarantee fee, higher rate, second mortgage, or other tradeoff.
Mistake 4: Ignoring PMI Cancellation Conventional PMI may be removable if requirements are met. That can affect long-term cost.
Mistake 5: Comparing Only the Monthly Payment Monthly payment matters, but also compare APR, closing costs, cash to close, mortgage insurance duration, and loan term.
Mistake 6: Using All Cash to Avoid PMI Avoiding PMI can be helpful, but not if it leaves you without money for moving, repairs, emergency savings, or reserves.
Mistake 7: Not Comparing Multiple Loan Programs A buyer may qualify for Conventional, FHA, VA, USDA, Jumbo, Non-QM, or other options.
The best choice depends on the full structure.
How Loan Factory Helps Buyers Compare Mortgage Insurance Cost At Loan Factory, we help buyers compare mortgage options side by side so they can understand how mortgage insurance affects payment, cash to close, and long-term cost.
Loan Factory’s website highlights access to 240+ lenders, transparent pricing, expert support, and TERA technology for mortgage comparison.
What Loan Factory Offers Homebuyers Conventional loan comparison with PMI cost review FHA loan comparison with MIP cost review VA loan review for eligible borrowers USDA loan review for eligible borrowers and eligible properties Jumbo, Non-QM, and other mortgage option comparisons Side-by-side review of rate, APR, mortgage insurance, fees, credits, and cash to close Help comparing low down payment options such as HomeReady and Home Possible, depending on eligibility Local loan advisor support to explain Loan Estimates, PMI, FHA MIP, USDA fees, VA funding fee, escrow, and total monthly payment TERA technology platform to support pricing, loan comparison, document flow, and loan review No application fee to start reviewing mortgage options Loan Factory does not guarantee loan approval, lower payment, lower rate, mortgage insurance cancellation, PMI removal, property eligibility, appraisal results, or that one loan program will be best for every borrower.
But we can help you compare available mortgage paths before you apply, make an offer, or choose a loan program.
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Author Box Written by: Loan Factory Mortgage Education Team
Loan Factory is a technology-powered mortgage platform helping borrowers compare mortgage options through a broad wholesale lender network. Our mortgage education content is designed to help buyers understand mortgage insurance cost, PMI, FHA MIP, USDA guarantee fees, VA funding fees, down payment options, monthly payments, closing costs, Loan Estimates, and the home loan process before applying.
Compliance Disclaimer This content is for informational and educational purposes only and is not a commitment to lend, not tax advice, not insurance advice, not legal advice, and not financial advice. Mortgage insurance cost, PMI cost, FHA mortgage insurance premium, USDA guarantee fees, VA funding fee, mortgage insurance cancellation, loan approval, Conventional, FHA, VA, USDA, Jumbo, Non-QM, or other loan eligibility, rates, APR, fees, payment estimates, down payment, seller credits, lender credits, closing costs, cash to close, escrow, property taxes, homeowners insurance, property eligibility, appraisal results, and closing timelines depend on borrower qualifications, credit profile, income, debts, assets, down payment, loan-to-value ratio, property details, lender guidelines, underwriting, mortgage servicer rules, investor requirements, and current program rules. Not all applicants, homes, properties, or programs will qualify. Terms may change without notice.
Loan Factory is not affiliated with or acting on behalf of HUD, FHA, VA, USDA, Fannie Mae, Freddie Mac, FHFA, CFPB, FTC, any mortgage insurer, insurance company, or government agency. FHA, VA, USDA, Conventional, Jumbo, conforming, non-conforming, refinance, cash-out refinance, home equity, and other loan programs are offered through participating lender partners and approved program providers, subject to eligibility and underwriting approval.
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FAQ: How Much Does Mortgage Insurance Cost? 
