What is Mortgage Insurance?
Mortgage insurance is protection for lenders in case a borrower cannot make their loan payments. For homebuyers, it’s typically required when making a down payment of less than 20 percent on a conventional loan, or on FHA mortgages, regardless of down payment size. Mortgage insurance doesn’t protect the homeowner directly, but it makes lenders more willing to approve loans with smaller down payments. Also called private mortgage insurance (PMI).