Private Mortgage Insurance (PMI)

Mortgage insurance provided by non-government issuers that protects a lender against lost if the borrower defaults. In the event the borrower doesn’t have a 20% down payment, lenders will allow a smaller down payment — as low as 2% in some cases. With the smaller down payment loans, however borrowers are usually required to carry private mortgage insurance. Private mortgage insurance payments are normally made annually or monthly.