What is PMI? PMIisPrivate Mortgage Insurance which insures the lender against
loss if the borrowers defaults on the mortgage loan. PMI
is usually required when the borrower’s down payment or equity
is less than 20% of the loan value. Of course, not all
lenders require PMI, although those that follow the Fannie
Mae and Freddie Mac guidelines for loan approval do require PMI.
mortgage insurance is usually escrowed into your mortgage
payment, and when a borrower reaches 20% equity, they no longer
need mortgage insurance. PMI is the equivalent of FHA or VA insurance on
government mortgage loans.