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, depending on the type of loan applied for. 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 or purchase price of your home) is greater than 80 percent on a Conventional loan.

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.

How is PMI calculated?

Your PMI premium is fixed based on plan type (loan-to-value ratio, loan type, loan term, credit score, etc.)and the premium payment is usually rolled into your monthly mortgage payment.