My wife and I are buying our first home, and our down payment is a little shy of the traditional 20% of the purchase price. Will it be mandatory for us to get home loan or mortgage insurance?
. In some cases, you might need home loan insurance, otherwise known as mortgage insurance.
Mortgage insurance is an insurance policy that protects your lender if you fall behind on your mortgage payments. It does NOT protect you in these situations. Mortgage insurance makes it possible for people to qualify for a home loan even with a smaller down payment.
To avoid needing mortgage insurance, you will need to get a standard mortgage and have the traditional 20% down payment. Some states also have programs for first-time homeowners with lowered mortgage payments and reduced or no requirements for mortgage insurance.
You will usually be required to buy home loan insurance if:
You have a smaller down payment
You have an FHA (Federal Housing Administration) mortgage
You have a mortgage backed by the USDA (U.S. Department of Agriculture)
If you have a mortgage backed by the U.S. Department of Veterans Affairs (VA), there is a funding fee that replaces home loan insurance but essentially functions the same way.
Buying a home and getting a mortgage can be stressful, but finding the right home insurance policy is easy with
. Answer a few questions, and in less than a minute you’ll have a list of quotes from trusted providers. Jerry will get you signed up with the policy that best fits your needs, and can even help you cancel your old policy.
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