Do you need private mortgage insurance on a conventional loan?

Private mortgage insurance is required by most lenders when the borrower makes a down payment of less than 20% on a conventional loan. While PMI on a conventional loan may seem burdensome – it actually allows lenders to approve loans for borrowers who can handle a mortgage payment but cannot save the traditional 20% down payment.

When is private mortgage insurance required?

Private mortgage insurance, or PMI, is required by lenders when you use a conventional loan to cover more than 80% of a home’s purchase price.

Can I pay for PMI on a conventional loan?

Paying for PMI on a conventional loan is common. We'll show you how private mortgage insurance works and how to minimize payments. Private mortgage insurance is a fact of life if you put down less than 20% on a conventional loan. Why? Because lenders take on more risk the lower the down payment they accept.