Private Mortgage Insurance

Private Mortgage Insurance (PMI) is required on loans that are considered a higher risk to the lender. PMI is required when the loan amount financed exceeds 80% of the properties value. The borrower is required to pay a monthly premium for the coverage which protects the lender in case the loan goes into default. For many homebuyers, PMI is the only option when purchasing a home if they do not have 20% to put down. The monthly premium varies depending upon the loan amount in comparison to the property value (LTV), loan size and credit score.