What is Private Mortgage Insurance (PMI)?
Private Mortgage Insurance, also known as PMI, is a supplemental insurance policy you may be required to obtain in order to get a mortgage loan. PMI is provided by private (non-government) companies and is usually required when your loan-to-value ratio – the amount of your mortgage loan divided by the value of your home – is greater than 80 percent.
PMI isn’t a bad thing – it allows you to make a lower down payment and still qualify for a mortgage loan. In fact without PMI, many of us would not be able to purchase our first home.