How much is mortgage insurance?

If you make a down payment of less than 20% with a conventional mortgage loan, you need to pay private mortgage insurance (PMI). Lenders use this clause as loan default protection. You can stop paying PMI once you reach 20% of your home value equity. PMI is automatically canceled at 22% equity. This only applies to conventional loans. 

Borrower-paid private mortgage insurance is added to your monthly mortgage payment. Lender-paid PMI pays your insurance premium at a higher interest rate because they pay it as a lump sum. You may also have the option of closing the loan yourself, in which case the interest doesn’t increase.

Apart from this, your down payment amount, credit history, and type of loan (whether it is a fixed-rate or adjustable-rate mortgage) influence your PMI cost. You can avoid paying a PMI if you take out a federal-backed loan like the Federal Housing Administration loan, the United States Department of Agriculture (USDA) loan, or a Veteran Affairs (VA) loan. You can make more than 20% of the home value as a down payment to avoid the PMI cost.