Private mortgage insurance (PMI) is a type of insurance required for certain borrowers who take out an FHA loan. The cost of the PMI varies depending on the size of the down payment and the borrower’s credit score. Generally, PMI can range from 0.5% to 1% of the loan amount per year. For example, if you take out a loan of $200,000, you may be required to pay as much as $2,000 per year in PMI coverage. Though PMI can be costly, it may be a necessary expense to obtain an FHA loan.