Homebuyers that can’t afford to put 20% down on the purchase price of their new home often opt to take out private mortgage insurance (PMI) with their lender to help seal the deal. This insurance protects the lender from a default, and can add more than $100 to a monthly mortgage payment.
“It’s very common to get PMI insurance if you have less than 20% [to put down],” says Bob Walters, chief economist at mortgage lender Quicken Loans based in Detroit. “The price you’ll pay depends on your loan to value and your credit score.”
Read more: How to Reduce or Eliminate Private Mortgage Insurance | Fox Business
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