20 %

Loan Amount is calculated as the Purchase Price minus the Down Payment. If your down payment is less than 20% of the purchase price, you may be required to pay Private Mortgage Insurance.

PMI is insurance that protects the lender against loss if the borrower stops making mortgage payments. Although it protects the lender, not the borrower, it is paid for by the borrower due to the higher risk associated with the loan.

A lower down payment can allow borrowers to purchase a house with a considerably smaller down payment. Loans with as little as three percent down may be available. When shopping for a mortgage, make sure you compare each loan and any associated costs.

FHA Mortgages: FHA loans are government-backed loans. In lieu of PMI, FHA loans carry what's called Mortgage Insurance Premium, also known as MIP. MIP is similar to PMI in the sense that it is a type of insurance for the lender. However, there are significant differences between PMI and MIP in both the way they are calculated and in the terms of the loans. Always consult with your lender to determine which type of loan is best for you.