What is PMI?

September 5th, 2005

PMI is Private Mortgage Insurance which insures the lender against loss if the borrowers defaults on the mortgage loan. PMI is usually required when the borrower’s down payment or equity is less than 20% of the loan value. Of course, not all lenders require PMI, although those that follow the Fannie Mae and Freddie Mac guidelines for loan approval do require PMI.

The mortgage insurance is usually escrowed into your mortgage payment, and when a borrower reaches 20% equity, they no longer need mortgage insurance. PMI is the equivalent of FHA or VA insurance on government mortgage loans. Apply today and see if you can avoid PMI.

Entry Filed under: About PMI, General