While it is an extra monthly expense for the borrower, its primary purpose is to —not the homeowner—in the event that the borrower defaults on their loan payments. Despite being an added cost, PMI serves as a vital tool that allows millions of people to enter the housing market years sooner than they would if they had to save a full 20% down payment. How Much Does PMI Cost?
Most borrowers pay between 0.22% and 2.25% of the original loan amount per year.
There are several ways to structure PMI payments, depending on your lender and financial goals: What is private mortgage insurance?
Private Mortgage Insurance (PMI): A Guide for Homebuyers Private Mortgage Insurance, commonly known as , is a type of insurance required by lenders when a homebuyer takes out a conventional mortgage with a down payment of less than 20% of the home's purchase price.
