Mortgage Insurance Definition


Mortgage insurance is issued by FHA or private insurers and is designed to protect lenders in case their clients become delinquent on payments. The lender will be reimbursed by the insurer if the client severely defaults and the foreclosure sale price does not cover the outstanding mortgage balance and the foreclosure costs.

Mortgage insurance is obligatory for buyers who are unable to make a 20% down payment. Mortgage insurance allows for mortgage loans with as little as 3% or, in some cases, even 0% down payment.

If the mortgage insurance is provided by a commercial insurer and not by the Federal Housing Authority (FHA), it is called PMI - private mortgage insurance.

Mortgage insurance can include coverage for mortgage repayment in case the borrower suffers disability or death. In this case both sides are protected - both borrowers and lender.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
Was this Mortgage QnA helpful?
Not at all
  • Currently 2.9/5 Stars
  • 1
  • 2
  • 3
  • 4
  • 5
Add to this Answer

Mortgage QnA is not a common forum. We have special rules:

  • Post no questions here. To ask a question, click the Ask a Question link
  • We will not publish answers that include any form of advertising
  • Add your answer only if it will contrubute to the quality of this Mortgage QnA and help future readers
If you have trouble reading the code, click on the code itself to generate a new random code. Verification Code Above:
Bookmark and share this QnA: