Mortgage Insurance

Definition

Mortgage insurance is a policy that protects the lender if you default on your home loan. It is required on conventional loans when your down payment is less than 20% (called private mortgage insurance or PMI) and on all FHA loans (called mortgage insurance premium or MIP). PMI can typically be removed once your loan-to-value ratio drops to 80%, while FHA MIP often remains for the life of the loan.