Home Purchase Options and Mortgage Insurance

Compare home purchase options by the money you need at closing, the full monthly payment and the cost over the time you expect to keep the loan. A mortgage without a separate mortgage-insurance payment is not automatically the least expensive choice.

This page retains its 2020 publication date. Its earlier program list has been replaced with general comparison guidance; those historical limits and eligibility claims are not current offers.

Which approach may fit your purchase?

Start with your available savings, a comfortable housing budget and the property you are considering. Private mortgage insurance generally protects the lender and adds to your costs. Compare an option with borrower-paid insurance against any alternatives available for your circumstances. The CFPB explains how private mortgage insurance works.

If your financing discussion includes a larger loan, our jumbo mortgage overview offers questions to explore. It does not establish a loan limit or confirm eligibility for your purchase.

When might another choice work better?

Lender-paid mortgage insurance usually comes with a higher interest rate than borrower-paid insurance. You cannot cancel lender-paid coverage using the same cancellation provisions as borrower-paid PMI. Ask how the rate difference affects your expected ownership period.

A piggyback arrangement adds a second loan alongside the main mortgage. Compare both payments, fees and repayment terms with a single loan that includes mortgage insurance. The second loan may have an adjustable rate, and keeping it can complicate refinancing. The CFPB describes these second-mortgage tradeoffs.

What information should you prepare?

Gather recent income records, bank statements and information showing where your down payment will come from. Documentation varies with employment and circumstances. These are preparation suggestions, not documents you must provide as a condition of receiving a Loan Estimate. Ask which records apply to you.

What questions should you ask before choosing?

• How much cash will I need at closing, and what savings will remain?
• What does the total housing payment include, and which parts can change?
• How do interest, fees, insurance and any second loan compare over my expected time in the home?
• If borrower-paid PMI applies, what cancellation conditions should I understand?

Use the CFPB’s Loan Estimate comparison guide when reviewing offers. For an initial planning conversation, visit our purchase planning page. This educational guidance is not a rate quote, approval or commitment to lend. Available terms and qualification depend on the lender, property, documentation and underwriting review.