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Private Mortgage Insurance

Private mortgage insurance, or PMI, allows you to buy a home even if you don’t have a 20% down payment.


Private mortgage insurance (PMI) is a type of insurance that protects your lender if you stop making payments on a conventional loan. PMI is usually required if you finance a home with a conventional loan and make less than a 20% down payment. The “private” in private mortgage insurance refers to the fact that the insurance is offered by privately owned companies, not the government. You’ll only pay PMI on conventional loans, which follow guidelines set by Fannie Mae and Freddie Mac.

PMI Explained

Your monthly PMI expense is typically between $30 and $70 per month for every $100,000 you borrow. Although most borrowers choose to pay PMI monthly, it can be paid in a lump sum, as a mark-up to your interest rate or a combination of a monthly payment and a lump sum payment.

The amount varies based on any or a combination of the following factors:

    • → Your credit score and credit history
    • → Your loan-to-value (LTV) ratio
    • → Your occupancy
    • → The type of home you’re financing
    • → How many people are borrowing
    • → Your debt-to-income (DTI) ratio
    • → Your loan repayment term
    • → Whether your rate is fixed or adjustable
    • → The purpose of the loan


Learn more about private mortgage insurance. 

Additional Resources

How to Remove Private Mortgage Insurance

What Is Mortgage Insurance?

FHA Mortgage Insurance: How Much Does It Cost?