What is Mortgage Insurance? Mortgage insurance is an insurance required by lenders to insure the lender against losses in the event of a foreclosure. It does not insure you. It insures the lender.  It is required on conventional loans with under 20% down, and can be expensive. The size of your loan and the percent you put down affects the cost.  FHA loans have their own version. There is a monthly premium, which is usually less then a traditional convention loan. There is also an upfront premium that is added onto your loan. This means that, on an FHA loan, your payment will be less, so will your equity position after closing.  VA has its own version, called a funding fee. It is an up front amount, and can be added into the loan. The amount is determined on your down payment, the loan terms, whether you are were active or reservist and if you ever used you eligibility before. Disabled Vets are exempt from this fee.  Rural Housing also has a mortgage insurance. It is a flat 2% of the loan and can be added into the mortgage. There is no monthly premiums.