Do I need mortgage insurance (PMI or MIP)? What’s the cost?

You may need mortgage insurance depending on the type of loan you choose and how much you pay as a downpayment. If you are using a conventional loan and put down less than 20%, you’ll likely be required to pay Private Mortgage Insurance (PMI). PMI typically costs between 0.3% and 1.5% of your loan amount per year. PMI can usually be canceled once you’ve built up 20% equity in your home. If you’re getting an FHA loan, mortgage insurance is called Mortgage Insurance Premium (MIP), and it’s required for all FHA loans—regardless of your down payment. MIP includes both an upfront fee of 1.75% of your loan amount and an annual fee between 0.45% and 1.05%, which is paid monthly. Unlike PMI, MIP typically can’t be removed unless you refinance into a conventional loan. If you’re eligible for a VA or USDA loan, you won’t need monthly mortgage insurance at all.