Mortgage Insurance Required in Washington State 

WA Mortgage Insurance: What You Need

Is mortgage insurance required in Washington State? If you’re buying a home with a low-down payment, you may need mortgage insurance. This guide explains the requirements, costs, and ways to reduce or avoid mortgage insurance in Washington. By understanding how mortgage insurance works, homebuyers can make informed decisions that help save money and build equity faster. 

For more details on mortgage insurance requirements, visit the Consumer Financial Protection Bureau (CFPB) and Washington State Housing Finance Commission (WSHFC). Is mortgage insurance required in Washington State? If you’re buying a home with a low-down payment, you may need mortgage insurance. 

WA Mortgage Insurance Requirements for Homebuyers 

Private Mortgage Insurance (PMI) for Conventional Loans 

Homebuyers with less than 20% down must usually pay PMI, which varies based on credit score, loan-to-value ratio (LTV), and loan type. If you’re asking, “Is mortgage insurance required in Washington State?” for conventional loans, the answer depends on your down payment and lender. PMI is designed to protect lenders, but it also helps buyers who may not have a large down payment secure financing for a home they might otherwise not afford.

Some lenders offer special programs that reduce PMI costs for qualified borrowers, making it important to shop around for the best mortgage options. Homebuyers with less than 20% down must usually pay PMI, which varies based on credit score, loan-to-value ratio (LTV), and loan type. If you’re asking, “Is mortgage insurance required in Washington State?” for conventional loans, the answer depends on your down payment and lender. 

PMI Cost Factors: 

• Costs range from 0.3% to 1.5% of the loan amount annually 

• Higher credit scores can lower PMI costs 

• PMI can be canceled at 20% home equity or automatically removed at 22% equity 

• Some lenders offer lender-paid PMI, which eliminates monthly payments but increases the interest rate 

For detailed PMI removal guidelines, check Fannie Mae’s PMI Cancellation Policy. 

FHA Mortgage Insurance (MIP) in Washington 

FHA loans require both upfront and annual MIP, even with higher down payments. These fees can make FHA loans more expensive over time, which is why comparing loan options is essential. 

FHA MIP Costs: 

• Upfront MIP: 1.75% of the loan amount 

• Annual MIP: 0.55% for most 30-year loans with <10% down 

• MIP Duration: Lifetime if down payment is <10%; removable after 11 years with 10%+ down 

VA and USDA Loan Mortgage Insurance Alternatives 

Instead of PMI, VA and USDA loans charge upfront and annual fees. These fees help sustain the loan programs while keeping costs manageable for borrowers. 

• VA Loans: Funding fee of 1.25% to 3.3%, based on service history and down payment 

• USDA Loans: 1% upfront guarantee fee and 0.35% annual fee 

For full details on VA loan benefits, visit the U.S. Department of Veterans Affairs. 

How WA Mortgage Lenders Handle Insurance Costs 

Lender-Paid Mortgage Insurance (LPMI) 

• The mortgage lender covers PMI in exchange for a higher interest rate. 

• This can lower monthly payments but may cost more over the life of the loan. 

Piggyback Loans (80-10-10 Loan) 

• 80% first mortgage, 10% second mortgage, 10% down payment—avoids PMI. 

• This strategy requires a strong credit score and may not be available for all borrowers. 

Check mortgage lender options here. 

Is WA Mortgage Insurance Required in Washington State? Key Considerations 

Rising Home Prices 

• Faster equity growth helps remove PMI sooner. 

• Washington State’s competitive market means many homeowners reach 20% equity within a few years. 

Down Payment Assistance Programs 

• The Washington State Housing Finance Commission (WSHFC) offers programs to reduce upfront costs. 

• Some programs provide grants or low-interest loans to help with down payments. 

Alt text: A homebuyer reviewing an insurance contract with an agent. 

How to Reduce or Avoid Mortgage Insurance 

Improve Your Credit Score 

• Higher credit scores reduce PMI rates. 

• A score above 760 can secure the lowest PMI rates available. 

Refinance to Remove PMI 

• If home values rise, refinancing into a loan with 20% equity removes PMI. 

• Many homeowners in Washington State refinance within 3-5 years to eliminate PMI. 

Save for a Larger Down Payment 

• If you can put down 20%, you can avoid PMI altogether. 

• Even 10-15% down reduces PMI costs significantly. 

Choose a VA or USDA Loan 

• VA loans have no PMI, making them an excellent choice for eligible borrowers. 

• USDA loans also avoid traditional PMI, making them affordable for rural homebuyers. 

Explore Homebuyer Wallet’s first-time buyer resources. 

FAQs About Mortgage Insurance in Washington 

Can you remove PMI early? 

Yes, if you reach 20% home equity and request removal from your lender. Some lenders also allow early removal with a new appraisal. 

Does every FHA loan require MIP? 

Yes, but if you put 10% down, MIP is removed after 11 years. Otherwise, it lasts for the loan’s lifetime. 

Is mortgage insurance required in Washington State for first-time buyers? 

Yes, unless they qualify for an exemption, such as a VA loan or a 20% down payment. 

What is the best way to avoid PMI? 

The best way is to save for a 20% down payment or choose a loan program that doesn’t require PMI. 

Summary 

Is mortgage insurance required in Washington State? In most cases, yes—but there are strategies to minimize or eliminate it. PMI and MIP add costs to a mortgage but can help homebuyers secure financing with lower upfront expenses. By improving your credit score, refinancing, or choosing the right loan program, you can reduce or avoid mortgage insurance costs. 

Take Action 

Looking for ways to lower mortgage insurance costs? Contact a mortgage lender today to explore your best options!