How Your Credit Score Affects Mortgage Insurance Costs

Let’s take a closer look at one reason your credit score matters when buying a home: mortgage insurance.

Most buyers know a higher credit score usually means a lower interest rate. What surprises a lot of people is that your credit score can also have a big impact on your monthly mortgage insurance.

If you’re making a smaller down payment, mortgage insurance is often part of the monthly payment. With government loan programs, your credit score doesn’t affect mortgage insurance at all — the upfront and monthly costs are the same no matter your score.

But with conventional loans that use private mortgage insurance, credit score makes a huge difference.

For example, on a $300,000 home with a 5% down payment, a buyer with a 760 credit score might pay about $45 a month for mortgage insurance. With a 660 score, that same insurance could add more than two hundred dollars to the monthly payment.

That’s why it’s so important to work with a knowledgeable loan originator and ask questions. Different loan programs work better for different credit profiles.

And remember — it’s always okay to ask. We’re here to help you get home.