What's The Difference Between Monthly and Upfront Private Mortgage Insurance (PMI)?

January 14, 2022

If you are putting less than 20% down on a conventional mortgage you will be required to purchase PMI, or Private Mortgage Insurance. Essentially, it is insurance to protect the lender due to the increased risk of home owners putting less than 20% down.

Typically your PMI is paid on a monthly basis and could include additional premiums from your lender. However, in many cases it makes more sense to pay your PMI upfront. If for instance you cannot pay the additional insurance fee monthly but have the cash to pay upfront you would want to do so. You can also expect to save a fair amount of money by paying upfront. Freddie Mac has found that you can expect to pay between $30 and $70 monthly for every $100,000 borrowed, the amount depends on a number of factors.