What is private mortgage insurance?

Private mortgage insurance, or PMI, is a type of coverage you buy if you get a conventional mortgage — one that isn't federally guaranteed — and put down less than 20% to purchase a home or have less than 20% equity when refinancing. PMI is insurance for the mortgage lender’s benefit, not yours.

What is private mortgage insurance (PMI)?

Private mortgage insurance, or PMI, is a policy that protects the lender against any losses if the borrower stops making payments or fails to repay their conventional loan. Borrowers who purchase a home with less than a 20% down payment are typically required to pay for mortgage insurance.

Do you need mortgage insurance for a conventional mortgage?

Here's what you need to know about mortgage insurance for conventional loans, which are not federally guaranteed or insured, and FHA mortgages, backed by the Federal Housing Administration. Many lenders offer conventional mortgages with low-down-payment requirements — some as low as 3%.