How Much Does Premium Mortgage Insurance (PMI) Cost?
If you’re buying a home in 2014 and have less than a 20% down payment, you might be wondering how much you’ll have to pay for PMI. The cost of private mortgage insurance is very much based on the loan type you are using:
In general, private mortgage insurance fees for conventional loans range anywhere from 0.3% of the loan amount to 1.15%. This is the amount you will pay every year for PMI. This could equate anywhere from an extra $50 per month to an extra few hundred dollars per month.
FHA loans, due to their risky nature, require two different types of mortgage insurance premiums. These two different types of mortgage insurance premiums are upfront and annual premiums. Here’s what that looks like in terms of percentages:
Currently, the upfront premium you will pay on an FHA loan is 1.75% of the loan’s base amount. This is a set rate that is applicable to all borrowers, no matter what the credit score, LTV value or loan amount is.
The annual premium is similar to that of a conventional loan. Typically, you’ll pay anywhere between 0.45% and 1.55% of the loan’s base amount.
In general, paying PMI every month can add up and be very expensive. If you can afford it, try to save up at least 20% of your total loan amount to avoid paying those costs.