Definition: Insurance protecting the lender against loss on a mortgage if the borrower defaults.

One of the most significant features of our new special low-down-payment loan program is that it is designed so that you do not have to purchase private mortgage insurance (PMI). This is significant because private mortgage insurance is expensive and usually required for low-down-payment loans.

Private mortgage insurance policies protect lenders against losses when borrowers cannot pay their mortgage loan. Lenders usually require that you purchase private mortgage insurance unless you put at least 20% down, and the cost of private mortgage insurance usually varies based on the:

• Loan-To-Value (LTV) ratio
• Borrower's credit score

Private mortgage insurance normally costs around one point on a high LTV loan if the borrower has an average credit score. So if the average American is required to pay private mortgage insurance on a $200,000 loan, their monthly payment increases by about $166, costing them several thousand dollars over the life of the loan.

However, you do not need to worry about this because we do not require you to purchase private mortgage insurance with this special low-down-payment loan program so you are not burdened with this additional cost. If you are required to pay PMI with your current mortgage, you can remove PMI by refinancing with a loan that does not require it.