Private Mortgage Insurance (PMI)
Insurance that protects the lender (not you) if you default on a conventional mortgage with less than 20% down. PMI adds to your monthly payment and can be removed once you reach 20% equity. FHA loans have their own version called mortgage insurance premiums (MIP).
Related guides
- Full credit & FICO® glossary
Browse all defined terms by category.
- Conventional Loan
A mortgage not insured by the federal government, following guidelines set by Fannie Mae and Freddie Mac. Requires a minimum credit score of 620. Offers better interest rates than FHA for borrowers with good credit, and private mortgage insurance (PMI) can be removed once you reach 20% equity.
- Down Payment
The upfront cash amount paid at the time of purchasing a home or vehicle, representing the portion of the purchase price not financed by a loan. A larger down payment reduces your loan amount and may help you avoid private mortgage insurance (PMI) on conventional loans.
Frequently Asked Questions About Private Mortgage Insurance (PMI)
What does Private Mortgage Insurance (PMI) mean?
Insurance that protects the lender (not you) if you default on a conventional mortgage with less than 20% down. PMI adds to your monthly payment and can be removed once you reach 20% equity. FHA loans have their own version called mortgage insurance premiums (MIP).
Is Private Mortgage Insurance (PMI) important for my FICO® score?
Understanding Private Mortgage Insurance (PMI) helps you manage your credit profile more effectively, which in turn supports a stronger FICO® score.