Will I have to get mortgage insurance?

Private mortgage insurance is required by most lenders when the borrower's down payment is less than 20% of the purchase price. The insurance protects the lender against default on the mortgage.

You may be able to reduce the cost, even if you can't entirely avoid the expense of mortgage insurance, by asking for lender-paid insurance. Although most lenders don't advertise the fact, they often will pay the mortgage insurance premiums in exchange for a slightly higher interest rate on the loan. This makes the insurance cost a tax deduction for you because it has become an interest expense instead of a non-deductible insurance premium.

Ask your lender for help.

But, since the higher interest rate stays in place for the duration of the loan, this plan is best for homeowners who plan to move by the time their equity reaches 20%, when the insurance typically would have been discontinued. If you plan to own the home for a long time, paying the insurance premiums yourself may be a better deal. Ask your lender for details.