Private mortgage insurance (PMI) is insurance that protects the lender in the event that the borrower defaults on their loan. PMI is typically required when the borrower has a down payment of less than 20% of the home’s purchase price.
The amount you pay for PMI varies depending on the factors below, including how much money you’re borrowing, how large of a down payment you’ve made, and what type of loan it is.
- Loan amount
- Down payment size
- Type of loan
If you are required to pay PMI, it is important to remember that you are still responsible for the full amount of the loan. In the event that you are unable to make your mortgage payments, the PMI policy will not cover your losses.