Private mortgage insurance was hard to come by in the years following the housing market collapse, as issuers incurred significant losses, with several even going bankrupt. As a result, FHA loans became the primary option for low-down-payment consumers, and their volume grew by more than 355% from 2007 to 2009.
But FHA loans have also grown significantly more expensive in recent years, as the housing market has rebounded in many respects. This, in turn, has led to the resurgence of private mortgage insurance, once again a viable option, as well as a dramatic reversal in FHA-loan growth, as originations actually fell by 39% from 2009 to 2015.
With that in mind, WalletHub compared the cost of various types of FHA loans to the combination of conventional loans with the necessary private mortgage insurance in order to help prospective buyers make the best possible decision for their wallets. You can find the results below.
Key Findings
FHA Policies Dominate: FHA loans are roughly 51% more popular than conventional loans with private insurance policies.
Number of Mortgage Insurance Policies Issued (Thousands)
*The number of policies issued, both FHA and private, reflect those used for purchases and refinances.
2014 vs. 2016: FHA insurance costs have fallen by 29%, while PMI costs have declined by 47% for people with credit scores of 760+ and increased by 28% for people with fair credit (i.e., a score of 660 or below).
5-Year Mortgage Insurance Costs Over Time
*Assumptions: Home Value: $212,100; Down Payment: 3.5%; Data not available for 2015
FHA vs. PMI: FHA loans should only be considered by buyers with low down payments and below-average credit scores (savings up to $11K). Everyone else should opt for PMI (savings up to $8K).
5-Year Cost of FHA vs PMI (5% down payment)
Note: Negative amounts indicate FHA is better.
Time Horizon: The longer you plan to stay in your home, the more PMI can save you – up to 81%. Unlike with private mortgage insurance, FHA premiums continue to be assessed throughout the life of a loan, even if your loan to value (LTV) ratio drops below 80%.
Overall Mortgage Cost: FHA vs. Conventional with PMI
Little Competition, No Variety: There is no price variation in the private mortgage insurance market. The six major players all charge the same amount.
660 Credit Score
| Info | Genworth | Radian | Essent | MGIC | Arch | National |
|---|---|---|---|---|---|---|
| 3.5% Down Payment | 1.90% | 1.90% | 1.90% | 1.90% | 1.90% | 1.90% |
| 5% Down Payment | 1.42% | 1.42% | 1.42% | 1.42% | 1.42% | 1.42% |
| 10% Down Payment | 1.00% | 1.00% | 1.00% | 1.00% | 1.00% | 1.00% |
Tips for Shopping for a Low Down Payment Mortgage
- Ask your mortgage lender about both FHA and private mortgage insurance options if you have less than 20% to put down.
- There is considerable variation in the lowest credit score and lowest down payment each bank will accept, so shopping around for the most affordable mortgage for your specific financial profile is very important.
- The fact that consumers are generally stuck with their lender’s PMI company of choice is another good reason to shop around at several lenders in order to make sure that you are getting the best loan terms AND the best deal on mortgage insurance.
- When comparing FHA and private mortgage insurance costs, be sure to include FHA’s up-front mortgage insurance cost that is typically financed into the loan amount.
- Remember that FHA MI premiums apply throughout the life of the loan, while PMI can be canceled once your loan amount reaches 78% of your home’s value, which can happen only a few years into the loan.
- Raising your credit score above 680 prior to getting a home loan can help significantly reduce the costs of mortgage insurance.
Detailed Findings
Private Mortgage Insurance Rates By Company
| Info | Genworth | Radian | Essent | MGIC | Arch | National |
|---|---|---|---|---|---|---|
| 760 | ||||||
| 3.5% Down Payment | 0.55% | 0.55% | 0.55% | 0.55% | 0.55% | 0.55% |
| 5% Down Payment | 0.41% | 0.41% | 0.41% | 0.41% | 0.41% | 0.41% |
| 10% Down Payment | 0.30% | 0.30% | 0.30% | 0.30% | 0.30% | 0.30% |
| 720 | ||||||
| 3.5% Down Payment | 0.95% | 0.95% | 0.95% | 0.95% | 0.95% | 0.95% |
| 5% Down Payment | 0.73% | 0.73% | 0.73% | 0.73% | 0.73% | 0.73% |
| 10% Down Payment | 0.50% | 0.50% | 0.50% | 0.50% | 0.50% | 0.50% |
| 680 | ||||||
| 3.5% Down Payment | 1.40% | 1.40% | 1.40% | 1.40% | 1.40% | 1.40% |
| 5% Down Payment | 1.08% | 1.08% | 1.08% | 1.08% | 1.08% | 1.08% |
| 10% Down Payment | 0.73% | 0.73% | 0.73% | 0.73% | 0.73% | 0.73% |
| 660 | ||||||
| 3.5% Down Payment | 1.90% | 1.90% | 1.90% | 1.90% | 1.90% | 1.90% |
| 5% Down Payment | 1.42% | 1.42% | 1.42% | 1.42% | 1.42% | 1.42% |
| 10% Down Payment | 1.00% | 1.00% | 1.00% | 1.00% | 1.00% | 1.00% |
| 620 | ||||||
| 3.5% Down Payment | 2.25% | 2.25% | 2.25% | 2.25% | 2.25% | 2.25% |
| 5% Down Payment | 1.61% | 1.61% | 1.61% | 1.61% | 1.61% | 1.61% |
| 10% Down Payment | 1.10% | 1.10% | 1.10% | 1.10% | 1.10% | 1.10% |
Detailed Monthly Payments
| 96.5% LTV | FHA Up-Front Premium | FHA Monthly Payment | Genworth Monthly Payment | MGIC Monthly Payment | Radian Monthly Payment | Essent Monthly Payment | Arch Monthly Payment | National Monthly Payment |
|---|---|---|---|---|---|---|---|---|
| 760 | $3,581.84 | $144.98 | $93.81 | $93.81 | $93.81 | $93.81 | $93.81 | $93.81 |
| 720 | $3,581.84 | $144.98 | $162.04 | $162.04 | $162.04 | $162.04 | $162.04 | $162.04 |
| 680 | $3,581.84 | $144.98 | $238.79 | $238.79 | $238.79 | $238.79 | $238.79 | $238.79 |
| 660 | $3,581.84 | $144.98 | $324.07 | $324.07 | $324.07 | $324.07 | $324.07 | $324.07 |
| 620 | $3,581.84 | $144.98 | $383.77 | $383.77 | $383.77 | $383.77 | $383.77 | $383.77 |
| 95% LTV | FHA Up-Front Premium | FHA Monthly Payment | Genworth Monthly Payment | MGIC Monthly Payment | Radian Monthly Payment | Essent Monthly Payment | Arch Monthly Payment | National Monthly Payment |
|---|---|---|---|---|---|---|---|---|
| 760 | $3,526.16 | $134.33 | $68.84 | $68.84 | $68.84 | $68.84 | $68.84 | $68.84 |
| 720 | $3,526.16 | $134.33 | $122.58 | $122.58 | $122.58 | $122.58 | $122.58 | $122.58 |
| 680 | $3,526.16 | $134.33 | $181.35 | $181.35 | $181.35 | $181.35 | $181.35 | $181.35 |
| 660 | $3,526.16 | $134.33 | $238.44 | $238.44 | $238.44 | $238.44 | $238.44 | $238.44 |
| 620 | $3,526.16 | $134.33 | $270.34 | $270.34 | $270.34 | $270.34 | $270.34 | $270.34 |
| 90% LTV | FHA Up-Front Premium | FHA Monthly Payment | Genworth Monthly Payment | MGIC Monthly Payment | Radian Monthly Payment | Essent Monthly Payment | Arch Monthly Payment | National Monthly Payment |
|---|---|---|---|---|---|---|---|---|
| 760 | $3,340.58 | $127.26 | $47.72 | $47.72 | $47.72 | $47.72 | $47.72 | $47.72 |
| 720 | $3,340.58 | $127.26 | $79.54 | $79.54 | $79.54 | $79.54 | $79.54 | $79.54 |
| 680 | $3,340.58 | $127.26 | $116.12 | $116.12 | $116.12 | $116.12 | $116.12 | $116.12 |
| 660 | $3,340.58 | $127.26 | $159.08 | $159.08 | $159.08 | $159.08 | $159.08 | $159.08 |
| 620 | $3,340.58 | $127.26 | $174.98 | $174.98 | $174.98 | $174.98 | $174.98 | $174.98 |
Mortgage Insurance Costs By Down Payment & Credit Score
| Info | 3-Year Mortgage Insurance Costs | |||
| 3-Year FHA MI Costs |
3-Year Private MI Costs |
3-Year Private MI Cost Savings |
||
| 96.5% LTV |
760 | $8,801 | $3,377 | $5,424 |
| 720 | $8,801 | $5,833 | $2,968 | |
| 680 | $8,801 | $8,596 | $205 | |
| 660 | $8,801 | $11,667 | -$2,865 | |
| 620 | $8,801 | $13,816 | -$5,015 | |
| Info | Info | |||
| 95% LTV |
760 | $8,362 | $2,478 | $5,884 |
| 720 | $8,362 | $4,413 | $3,949 | |
| 680 | $8,362 | $6,528 | $1,834 | |
| 660 | $8,362 | $8,584 | -$222 | |
| 620 | $8,362 | $9,732 | -$1,370 | |
| Info | Info | |||
| 90% LTV |
760 | $7,922 | $1,718 | $6,204 |
| 720 | $7,922 | $2,863 | $5,059 | |
| 680 | $7,922 | $4,180 | $3,741 | |
| 660 | $7,922 | $5,727 | $2,195 | |
| 620 | $7,922 | $6,299 | $1,623 | |
| Info | 5-Year Mortgage Insurance Costs | |||
| 5-Year FHA MI Costs |
5-Year Private MI Costs |
5-Year Private MI Cost Savings |
||
| 96.5% LTV |
760 | $12,281 | $5,629 | $6,652 |
| 720 | $12,281 | $9,722 | $2,558 | |
| 680 | $12,281 | $14,327 | -$2,047 | |
| 660 | $12,281 | $19,444 | -$7,164 | |
| 620 | $12,281 | $23,026 | -$10,746 | |
| Info | Info | |||
| 95% LTV |
760 | $11,586 | $4,131 | $7,455 |
| 720 | $11,586 | $7,355 | $4,231 | |
| 680 | $11,586 | $10,881 | $705 | |
| 660 | $11,586 | $14,306 | -$2,720 | |
| 620 | $11,586 | $16,220 | -$4,634 | |
| Info | Info | |||
| 90% LTV |
760 | $10,976 | $2,863 | $8,113 |
| 720 | $10,976 | $4,772 | $6,204 | |
| 680 | $10,976 | $6,967 | $4,009 | |
| 660 | $10,976 | $9,545 | $1,432 | |
| 620 | $10,976 | $10,499 | $477 | |
| Info | 7-Year Mortgage Insurance Costs | |||
| 7-Year FHA MI Costs |
7-Year Private MI Costs |
7-Year Private MI Cost Savings |
||
| 96.5% LTV |
760 | $15,760 | $7,880 | $7,880 |
| 720 | $15,760 | $13,611 | $2,149 | |
| 680 | $15,760 | $20,058 | -$4,298 | |
| 660 | $15,760 | $27,222 | -$11,462 | |
| 620 | $15,760 | $32,237 | -$16,476 | |
| Info | Info | |||
| 95% LTV |
760 | $14,810 | $5,783 | $9,027 |
| 720 | $14,810 | $10,296 | $4,513 | |
| 680 | $14,810 | $15,233 | -$423 | |
| 660 | $14,810 | $20,029 | -$5,219 | |
| 620 | $14,810 | $22,708 | -$7,899 | |
| Info | Info | |||
| 90% LTV |
760 | $14,030 | $4,009 | $10,022 |
| 720 | $14,030 | $6,681 | $7,349 | |
| 680 | $14,030 | $9,754 | $4,276 | |
| 660 | $14,030 | $13,362 | $668 | |
| 620 | $14,030 | $14,699 | -$668 | |
Historical Rates Comparison
Private Mortgage Insurance Rates - 3.5% Down Payment
Private Mortgage Insurance Rates - 5% Down Payment
Private Mortgage Insurance Rates - 10% Down Payment
Ask the Experts
For added insight into the mortgage insurance market, we turned to a panel of experts in the real estate and lending industries. You can check out the questions we posed to them as well as their insightful responses below.
- What types of borrowers should get an FHA loan instead of a conventional loan with private mortgage insurance?
- Is there a minimum down payment that consumers should have before house hunting?
- Why do private-mortgage-insurance companies charge most consumer segments the exact same amount?
- How do you expect mortgage insurance premiums to behave over the next few years?
Ask the Experts
Director of Financial Regulation Studies at the Cato Institute
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Assistant Professor of Law at University of California, Irvine School of Law
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Professor and Chair of the Department of Accounting and Finance at University of Wisconsin - River Falls
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Lecturer of Finance and former Director of The Corky McMillin Center for Real Estate, College of Business Administration, San Diego State University
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Assistant Professor of Finance & Risk Management and Chair of the Accounting Finance & Law Department, , State University of New York at Oswego
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Associate Professor of Family, Consumer and Human Development, Utah State University
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Methodology
In conducting this study, we analyzed mortgage insurance rates from four of the top U.S. private mortgage insurance companies and compared them to those of mortgages insured by the Federal Housing Administration. Specifically, we collected the 30-Year purchase, full doc, primary residence, non–refundable monthly private mortgage insurance rates from the websites of the companies we reviewed and compared them to the FHA 203B upfront and monthly premiums.
We did not include interest rates in our monthly calculations or comparisons. We have attempted to collaborate with United (another large mortgage insurance company) in order to facilitate the inclusion of such information, but we could not obtain comparable results due to their unique risk based pricing system.
We verified down payment and credit score requirements for twenty-five of the largest U.S. banks using online mortgage calculators and by contacting customer service. Only 16 offer conventional loans with 3.5% down payment. It is important to note that loan-to-value ratio and credit score are only two of the factors used by financial institutions in underwriting mortgages.
