Insurance
PMI
Private Mortgage Insurance — see the full entry under Private Mortgage Insurance. PMI is required on conventional loans when you put less than 20% down and typically costs 0.5% to 1.5% of the loan amount per year. It can be removed once you reach 20% equity, and is automatically canceled when you reach 22% equity based on the original purchase price.
Why It Matters
PMI protects either you or your lender from financial loss related to your home. Insurance costs are a mandatory part of homeownership that directly impacts your monthly payment through escrow — so understanding what you're paying for and how to optimize coverage can save meaningful money.
Insurance premiums vary widely based on your location, home characteristics, coverage limits, and deductible choices. For pmi, comparing quotes from multiple providers is essential — premiums for the same coverage can differ by 30-50% between companies.
Real-World Example
Typical costs for pmi range from $1,000-$4,000+ per year depending on your state. In high-risk areas (hurricane, tornado, wildfire zones), premiums can be significantly higher. This adds $80-$350/month to your housing costs.
Pro Tip
Bundle your insurance policies (home + auto) with one provider for 10-20% savings. Also review your coverage annually — you may be overpaying for coverage you don't need or underinsured in areas that matter.