Published:
February 22, 2018
Last updated:
February 5, 2026
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Sammamish Mortgage
6 min read
Do First-Time Buyers in Washington Have to Pay Mortgage Insurance?
In This Article

First-time home buyers in Washington tend to have a lot of questions about mortgage insurance. In this article, we’ll answer some of the more pressing inquiries, including whether first-time buyers in Washington need to pay mortgage insurance.

Mortgage Insurance for First-Time Buyers

You won’t “trigger” a mortgage insurance requirement just because you’re a first-time home buyer. It has more to do with the size of your loan, in relation to the home’s value.

Mortgage insurance is usually required whenever the loan-to-value (LTV) ratio rises above 80%. This means that if you take out a single mortgage loan to buy a house, and make a down payment below 20%, you’ll probably be required to pay for mortgage insurance. This is true whether you are a first-time or repeat home buyer. It’s just an industry requirement.

It’s also important to realize that there are different kinds of mortgage insurance, just like there are different types of home loans available to borrowers in Washington.

These policies fall into one of two categories:

  • PMI. Private mortgage insurance (PMI) is used for conventional home loans that are not backed or guaranteed by the government. The cost of PMI can vary depending on several factors. These premiums usually range from 0.3% to 1.5% of the original loan amount, paid annually. According to an analysis conducted by the research team at Freddie Mac, borrowers who are required to pay for private mortgage insurance can expect to pay somewhere between $30 and $70 per month for every $100,000 borrowed.
  • FHA: First-time home buyers in Washington who use FHA loans also have to pay mortgage insurance, in most cases. FHA loans actually have two different kinds of premiums. There is an upfront premium that usually equals 1.75% of the loan amount. There is also an annual premium, and it can vary based on the size and term of the loan. The annual premium for most FHA home buyers is 0.85%, when making the minimum down payment of 3.5%.

A key difference here is that private mortgage insurance typically can be canceled when the homeowner reaches a certain equity level. But with an FHA loan, most borrowers have to pay the annual mortgage insurance premium for the life of the loan. So that’s an important consideration for Washington first-time buyers who have to pay mortgage insurance on their loans.

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Upside: Buying Sooner With Less Money Down

There’s an upside to all of this. PMI (and the FHA equivalent) allow home buyers to purchase a house sooner and with less money down. The downside, of course, is that it increases the size of your monthly payments. But for many first-time home buyers in Washington, the benefits of having a smaller down payment far outweigh the costs of mortgage insurance.

Here’s a recap of key points covered in this article:

  • Some first-time buyers in Washington have to pay mortgage insurance, while others do not. It largely depends on the loan-to-value ratio and the down payment amount.
  • When the LTV rises above 80% (as is the case with home buyers who put less than 20% down), mortgage insurance is typically required.
  • There are two basic kinds of mortgage insurance – private and government. PMI is applied to conventional home loans that are not backed by the government. FHA loans have government-provided insurance requirements, some of which must be paid for the life of the loan.
  • Without these policies, most home buyers would have to make larger down payments and would therefore have to wait longer before buying a home.

How Mortgage Insurance Affects Monthly Payments

One of the biggest concerns for first-time buyers in Washington is how mortgage insurance impacts their monthly housing costs. While PMI or FHA mortgage insurance does increase your payment, the increase is often smaller than many buyers expect. In some cases, the added cost of mortgage insurance may be comparable to a utility bill or streaming subscriptions combined.

For example, a buyer purchasing a $450,000 home with a 5% down payment might pay between $100 and $250 per month in mortgage insurance, depending on the loan type, credit score, and insurer. For many households, that additional cost is manageable when weighed against the benefits of homeownership.

It’s also worth noting that mortgage insurance costs generally decrease over time for conventional loans. As you pay down your mortgage and your home potentially appreciates in value, your equity grows. Once you reach the required equity threshold, PMI can be removed, reducing your monthly payment.

Ways Washington First-Time Buyers Can Reduce Mortgage Insurance Costs

While mortgage insurance is often unavoidable with low down payment loans, there are strategies Washington buyers can use to minimize its impact. Improving your credit score before applying for a mortgage can significantly reduce PMI costs, as lenders view higher-credit borrowers as lower risk.

Another option is choosing a loan structure that fits your long-term plans. Some buyers opt for lender-paid mortgage insurance (LPMI), where the lender covers PMI in exchange for a slightly higher interest rate. Others plan to refinance into a conventional loan later, once they’ve built enough equity to eliminate mortgage insurance altogether.

Down payment assistance programs available in Washington may also help buyers reach higher down payment thresholds, which can reduce or even eliminate the need for mortgage insurance.

Mortgage Insurance as a Stepping Stone

For many first-time home buyers in Washington, mortgage insurance isn’t a permanent cost — it’s a temporary trade-off. It allows buyers to enter the housing market sooner, start building equity, and benefit from home price appreciation rather than waiting years to save a 20% down payment.

When viewed this way, mortgage insurance becomes less of a burden and more of a tool. It helps bridge the gap between renting and owning, especially in competitive housing markets where prices continue to rise.

Ultimately, understanding how mortgage insurance works empowers first-time buyers to make informed decisions. With the right loan, planning, and expectations, mortgage insurance can be a manageable part of a successful homeownership journey in Washington.

Have Questions or Need a Home Loan?

If you have questions about our mortgage programs for first time home buyers, we’d love to help. Sammamish Mortgage is a local, family-owned company based in Bellevue, WA, and we offer mortgage programs to borrowers in the entire state, as well as Oregon, Colorado, Idaho, and California. Visit our website to get an instant rate quote or to use our mortgage calculator. Please contact us if you have mortgage-related questions or want to get pre-approved for a mortgage.