Most people think there's one kind of mortgage insurance. There are actually several:
PMI: Conventional loans under twenty percent down. Protects the lender, not you. Rates run 0.2–2% annually. Cancels automatically at 78% Loan to Value or you can request it at 80%.
MIP: FHA loans only. 1.75% upfront plus 0.15–0.75% annually. Can last the full loan term depending on your down payment.
VA Funding Fee: A one-time fee of 0.5–3.3%. Serves the same purpose as insurance. Some disabled veterans are exempt.
USDA Guarantee Fee: 1% upfront plus 0.35% annually. One of the lowest costs of any government-backed program.
What most buyers never get told:
Lender-Paid PMI: The lender absorbs PMI in exchange for a higher rate. It never cancels.
Single-Premium PMI: Full PMI paid upfront at closing. Lower monthly payment, ideal for long-term buyers.
Split-Premium PMI: Part at closing, part monthly. Good for balancing upfront cash against monthly budget
Mortgage Protection Insurance (MPI): Unlike PMI or MIP, this one protects your family — covering payments in the event of death, disability, or job loss. Most buyers have never heard of it.
Note: Congress permanently reinstated the mortgage insurance tax deduction — eligible homeowners can claim it starting tax year 2026.
Mortgage Insurance Has More Than One Face
Educational content only. Not legal, tax, or financial advice. Subject to qualification and applicable regulations.
