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Step 16: Get Homeowners Insurance

Bind a homeowners policy (and flood insurance if required) before closing, with your lender named on it.

Your lender requires homeowners insurance before closing, because the home secures the loan. Shop early: in some states, coverage has become harder to find and more expensive.

What lenders require

  • Dwelling coverage at least equal to the replacement cost of the home or the loan amount
  • Your lender named as mortgagee, using the mortgagee clause they give you
  • A policy start date on or before closing
  • Flood insurance if the home is in a high-risk flood zone

Condos usually need an HO-6 policy for the interior, while the HOA's master policy covers the building.

How you pay

The first year's premium is usually paid at or before closing as one of your prepaid items. After that, a monthly share is collected with your mortgage payment and held in your escrow account, and the servicer pays the renewal.

Shopping tips

  • Get at least three quotes, including from your auto insurer for a bundle discount.
  • Compare deductibles, including separate wind and hail deductibles.
  • Ask about roof age. Older roofs can limit coverage or raise premiums.
  • Update Unbeatable with your actual premium so your payment estimate stays accurate.

Next: underwriting and conditions.

Your next move, by loan program

  • Conventional: Conventional lenders require coverage at least equal to the lower of the loan amount or the home's replacement cost. Upload my insurance
  • FHA: FHA requires hazard insurance for the life of the loan, and flood insurance in high-risk flood zones. Upload my insurance
  • VA: VA requires insurance on the home, and flood insurance if it's in a special flood hazard area. Upload my insurance
  • USDA: USDA requires insurance for at least the loan amount or replacement cost, collected through escrow. Upload my insurance
  • Jumbo: High-value homes may need specialty carriers. Start shopping early, since availability varies by state. Upload my insurance
  • Investor: Rentals need a landlord (dwelling fire) policy, often with rent-loss coverage. DSCR lenders typically require it. Upload my insurance