What is Mortgage Insurance? | Boise Mortgage Insurance | Boise Home Loans

What is Mortgage Insurance?

The primary reason for mortgage insurance is to protect the lender from non payment on a loan in the event the borrower defaults.

Mortgage insurance does not have any benefit to the borrower other than helping them get financed if they cannot meet the 20% down payment requirement, which is a relatively standard guideline for most loan programs. What this means is, if you are interested in financing a home and you haven’t saved or acquired at least 20% down payment for your home, you will be required to apply for and purchase private mortgage insurance (PMI). (Your lender should walk you through this process.) This will allow for you to get financed for a home for as little as 3.5% down payment as opposed to the 20% normally required.

Please note that there are many options for financing, and the guideline requirements vary based on the type of loan you are applying for, so it is important to consult a preferred qualified home loan specialist in your area about which programs will work for you. Once you have qualified for the loan, the private mortgage insurance payment is worked into your monthly mortgage payment and usually can be waived once you have reached the minimum 20% Loan to Value (LTV) on your mortgage. Guidelines for waiving PMI will vary based on the type of loan you are applying for.

As stated before there are many programs available that can help you get a loan with a lower down payment by having mortgage insurance. There are many U.S. government insured loans available through FHA, VA, and RHS. As well as grants and down payment assistance programs in Idaho that can help you cover some of if not all of your down payment if you qualify.