Freddie Mac hub
PMI versus government insurance
Every loan with a small down payment has some kind of insurance for the lender. Who provides it differs.
Private mortgage insurance
On a conventional loan, a lender usually requires private mortgage insurance, or PMI, when the down payment is small. A private company provides it. You pay for it, usually as part of the monthly payment, and it protects the lender, not you.
When PMI can end
On many conventional loans PMI can be removed once enough of the loan is paid down or the home has gained enough. Ask a lender exactly how it works on yours.
Government insurance
FHA loans carry insurance from the Federal Housing Administration, and VA loans carry a guarantee from the Department of Veterans Affairs. They work differently from PMI and can cost more or less. The FHA and VA hubs explain each.
How to compare
Ask a lender to show the monthly cost of each kind of insurance on the Loan Estimate, so you can compare the whole payment and not only one part.
What this rests on
Amounts and limits change and differ by lender and by county. Ask a lender, and read the official page. Read the official page.
More Freddie Mac topics
- Freddie Mac does not lend to buyersIt buys loans from lenders. That one fact explains most of the words you will hear.
- Conforming loans and the yearly limitA loan can be too large for Freddie Mac to buy. The limit changes every year.
- Home Possible and other programsFreddie Mac gives lenders a program called Home Possible. A lender decides whether it fits you.
- The home has to pass tooA lender looks at the house as well as the buyer.
- Steps from search to keysThe order is the same for most home loans.
Educational only. AskResi is not a lender.