What Is PMI (Private Mortgage Insurance)?
Private Mortgage Insurance (PMI) is a type of insurance that protects the lender if a borrower defaults on a loan. It is typically required when a borrower makes a down payment of less than 20% on a conventional loan.
PMI does not protect the borrower — it is designed to reduce lender risk.
When Is PMI Required?
PMI is generally required when:
- The down payment is less than 20%
- The loan is a conventional mortgage
- The borrower has not yet built enough equity
How PMI Affects Your Payment
PMI is added to your monthly mortgage payment and increases the overall cost of your loan. The exact amount depends on factors such as loan size, credit score, and down payment.
How to Remove PMI
PMI can typically be removed once you reach a certain level of equity in your home, often around 20%.
Homeowners may also eliminate PMI through mortgage refinancing if their financial situation improves.
Explore Loan Options Without PMI
Some loan programs, such as VA loans , do not require PMI.
To explore alternatives, visit home purchase loan options.
Frequently Asked Questions
Can PMI be avoided?
Yes, by making a larger down payment or choosing certain loan types.
Is PMI permanent?
No. It can typically be removed once enough equity is built.
Let's Discuss Your Home Financing Options Today!
Ace Mortgage Loan Corporation provides quality mortgage services to the people of Broward and Palm Beach Counties. Call us today at (954) 777-4774 to get started!