When Is Mortgage Insurance Necessary?

Mortgage insurance may be required as part of your mortgage depending on the type of loan program you choose or the loan-to-value (LTV) of your loan.

For FHA-backed mortgages (purchase or refinance), mortgage insurance is required in the form of the Mortgage Insurance Premium (MIP). All FHA-insured mortgage holders are required to pay for both the Upfront Mortgage Insurance Premium (UFMIP) and the FHA Monthly Mortgage Insurance Premium (MMIP). The amount of MMIP is based on the Term and LTV of the loan.

For conventional loans, applicants who don’t have 20% down payment for their home purchase (or 20% equity in the home for a refinance) will be required to pay for mortgage insurance. With conventional loans, the mortgage insurance is generally either a one-time upfront premium or a monthly premium paid until the LTV on the loan goes to below 78% LTV.

For more information about how mortgage insurance may affect your home loan plans, speak with your Reliance First Capital mortgage analyst.