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You generally need mortgage insurance if you don't make at least a 20% down payment when you buy a home. However, there are some lenders and government programs that don't require mortgage insurance even if you have a lower down payment. Just be aware that these options may be more expensive in other ways.
Do I Need Mortgage Insurance?
Lenders may require you to purchase mortgage insurance as part of your loan agreement because it protects the lender in case you don't make loan payments. It's separate and in addition to a homeowners insurance policy that protects you and which your lender will typically require.
The type of loan you get can impact whether you might need mortgage insurance.
Conventional Mortgages
Conventional mortgages offered by private lenders may require private mortgage insurance (PMI) if you put down less than 20%. You may be able to pay the full amount upfront, pay it monthly or use a combination of the two.
Monthly payments are the most common option, although some homeowners pay part of the premiums upfront to help lower their monthly bill. Before you decide, review the terms of your loan to see what will happen if you make a partial or full upfront payment and then sell the home or refinance the home loan within the next few years.
Some lenders also offer mortgages with lender-paid PMI. It can help lower your monthly payments, but the lenders generally charge a higher interest rate, which might wind up costing you more money in the long run.
Learn more: What Is Private Mortgage Insurance (PMI)?
FHA Mortgages
Federal Housing Administration (FHA) mortgages may require lower down payments (3.5%) and have less strict credit requirements than conventional mortgages. However, FHA mortgage loans require mortgage insurance premiums (MIPs).
You'll have to pay an upfront mortgage insurance premium when you close on your home, although you can roll it into the mortgage balance and pay it off over time. Additionally, there's an annual premium that you'll pay 1/12th of with each monthly payment.
Learn more: What Is an FHA Mortgage Insurance Premium?
USDA Mortgages
U.S. Department of Agriculture (USDA) home loans don't have mortgage insurance, but they do require a USDA guarantee fee that serves the same purpose. As of April 2025, you'll have to pay 1% of the loan amount upfront and 0.35% of the remaining balance annually, divided into your monthly payments. You can roll the upfront portion into your mortgage if you'd prefer.
Learn more: Complete Costs of Buying a Home
VA Mortgages
U.S. Department of Veterans Affairs (VA) home loans don't require mortgage insurance or a down payment. However, unless you qualify for a waiver, you will have to pay a one-time funding fee at closing or roll the fee into your loan. The fee ranges from 0.5% to 3.3% of the loan amount.
Learn more: What to Know About VA Loan Closing Costs
How to Avoid Mortgage Insurance
The most straightforward ways to avoid paying for mortgage insurance are to:
- Put at least 20% down on a conventional loan
- Get a conventional loan with lender-paid mortgage insurance
- Take out a USDA or VA loan (although these have other fees that serve a similar purpose to mortgage insurance)
Additionally, you may be able to find a piggyback loan, or 80-10-10 loan, to avoid PMI. With this arrangement, you put 10% down, get another loan to cover the other 10% of your down payment and take out the mortgage for 80% of the purchase.
The second loan might be a home equity loan or home equity line of credit (HELOC), and it could have a higher interest rate than your first mortgage. It might even cost more than paying for PMI. It's sometimes a good option if someone is expecting a large influx of money that they can use to pay off the loan, such as proceeds from selling a home.
Tip: Continue learning about mortgage insurance, homeowners insurance, filing claims and related topics in Experian's home insurance hub.
How to Get Rid of Mortgage Insurance
If you're getting or already have a loan with mortgage insurance, the options for removing it will depend on the type of loan.
- Conventional loan: The PMI will be automatically removed when your loan balance is 78% of the home's original value. Additionally, you can request PMI cancellation when the loan balance is 80% or less than the home's original value.
- FHA loan: If you put over 10% down, the lender may remove the MIP after 11 years. If your down payment is less than 10%, the MIP may remain for the life of the loan.
USDA loans don't have an option to get rid of the annual fee, and VA loans don't have annual fees. But if you're in a mortgage with a fee you can't get rid of, you can refinance into a loan that doesn't require mortgage insurance.
Learn more: How to Remove Mortgage Insurance on an FHA Loan
Frequently Asked Questions
What Does Mortgage Insurance Cover?
Mortgage insurance covers the mortgage lender in case the borrower defaults on the loan. When this happens, the lender can foreclose on the home, sell it and take the proceeds to cover the past-due debt. If the sale doesn't cover the entire amount, mortgage insurance can cover the gap.
How Much Is Mortgage Insurance?
Mortgage insurance premiums can vary depending on the type of loan, your credit and the loan's specifics.
- With conventional loans, you might pay around 0.58% to 1.86% of the loan amount annually.
- FHA loans generally have a 1.75% upfront fee and an annual fee that ranges from 0.15% to 0.75%.
- As of April 2025, USDA loans charge a 1% upfront fee and 0.35% of the remaining balance annually.
- VA loan funding fees generally range from 1.25% to 2.15% of the loan amount, depending on your down payment and whether you've taken out a VA loan before. But there are some options with fees as low as 0.5% and as high as 3.3%.
Is Mortgage Insurance Tax Deductible?
Mortgage insurance might be deductible if you're paying the premiums for a policy on a rental property. Otherwise, private mortgage insurance was tax deductible from 2018 through 2021, but wasn't deductible for the 2022 to 2025 tax years. It's tax deductible once again starting in 2026.
Shop Mortgage Lenders and Loan Options
While mortgage insurance can increase your monthly payment, it may be a small price to pay to move into a home of your own. If you're ready to buy a home, shop around to find loan options and offers from different mortgage lenders. Compare the total cost, including the closing costs, interest and mortgage insurance, to find the option that will work best. And remember, even if you have to pay for mortgage insurance now, you may be able to remove it later.