 TITLE: How Much Does Private Mortgage Insurance (PMI) Cost? CONTENT: The Real Cost of PMI\n--------------------\nWhile PMI will increase the initial cost of your monthly payments, it could be a worthwhile tradeoff. You might be able to purchase a home sooner if you don't need to put 20% down. Or, you may be able to buy a larger or nicer home rather than making a large down payment.\nYou could also compare a conventional loan with PMI to a government-backed mortgage loan with MIP to see which offers the lowest monthly payment. A 2021 report from the Urban Institute shows the initial monthly payments for a conventional loan with PMI and an FHA loan with MIP based on borrowers' down payments and credit scores.\nSource: The Urban Institute\nThe monthly figures are for a $275,000 home and the amounts don't account for some expenses, such as homeowners insurance or property taxes.\nIn general, if you're not putting much down or you don't have good credit, an FHA loan may have lower monthly payments. But you could be better off with a conventional loan and PMI if you have a good credit score or can afford a larger down payment.\nYou may be able to avoid paying for mortgage insurance with other types of government-backed mortgages, such as U.S. Department of Agriculture (USDA) loans and loans through the Department of Veterans Affairs (VA). But you could pay upfront or monthly fees instead. If you qualify for either type of loan, you'll want to consider the upfront and monthly costs for these as well.\nAlso consider how long you plan on living in the home and whether you're likely to refinance your mortgage. An FHA loan's insurance premiums could remain for the life of the loan, which may increase your long-term costs. But there are several ways to cancel your PMI and lower your monthly payment. END