Morgage insurance should not be mistaken as mortgage life insurance which is a completely different. Mortgage life insurance doesn’t involve the banks. Morgage insurance is an insurance program in which an insurance company will cover the risk that you may be unable to pay. 

When you receive a mortgage, the lender will usually assume all of the risks associated. If you are considered a high risk borrower, you will likely be asked to take out morgage insurance so the bank can limit their risk.

One of the easiest ways to determine if insurance will be required is based on your down payment. Banks typically require insurance for all borrowers if they can not afford a 20% down payment. Just like any form of insurance you will have some payments to make to the insurer and this amount will be added to your monthly payment plan through the lender. This is why a morgage calulator is only away to estimate because the monthly premiums for morgage insurance vary from company to company and of course from case to case. This insurance while protecting the lender does have the advantage of allowing you to get a mortgage with a limited down payment as opposed to a 20% down payment which is a financially sound decision for many people.