If you make a down payment on a home that’s less than 20 percent of the cost, you’ll need to get private mortgage insurance. This kind of insurance protects your mortgage lender if you skip out on your loan. It usually costs up to 2.5 percent of your total annual mortgage each year, but you can get rid of it once you’ve paid off 20 percent of your home’s value. It helps to request this yourself, because lenders must (by law) let you off the hook once you’ve paid 22 percent of the purchase price. Why wait for them to stop billing you?
You may also be a candidate for lender-paid mortgage insurance (LPMI). It’s designed for people who don’t plan to own their home for the full length of the mortgage, allowing them to spread the PMI over the length of the loan so you pay less up front (but more over the total length of the loan, if you decide to stay).