how mortgage insurance works
mortgage insurance may come with a typical pay as you go premium payment or it may be capitalized into a lump sum payment at the time of mortgage origination for homeowners who are required to have pmi because of the 80 loan to value ratio rule they can request that the insurance policy be canceled once 20 of the principal balance has been paid off 1here are three types of mortgage insurance private mortgage insurance pmi private mortgage insurance pmi is a type of mortgage insurance a borrower might be required to buy as a condition of a conventional mortgage loan like other kinds of mortgage insurance pmi protects the lender not the borrower the lender arranges pmi and it s provided by private insurance companies pmi is usually required if a borrower gets a conventional loan with a down payment of less than 20 a lender might also require pmi if a borrower is refinancing with a conventional loan and equity is less than 20 of the home s value 2qualified mortgage insurance premium mip 