Mortgage Insurance

With a down payment of less than 20%, both FHA and conventional loans require borrowers to get mortgage insurance that protects the lender in case of default. The differences are:

  • FHA premiums cost the same no matter your credit score. Private mortgage insurers charge more if you have a low credit score.

  • FHA mortgage insurance premiums last for the life of the loan if you make a down payment of less than 10%. You can get rid of FHA mortgage insurance by refinancing to a conventional loan. By contrast, private mortgage insurance is automatically canceled after your equity reaches 78% of the purchase price.

  • Both FHA and private mortgage insurance costs vary according to the size of the down payment.

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