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Traditionally, mortgage lenders required a down payment of at least 20%. Then, insurance providers like Radian began offering mortgage insurance (or MI, as it's often called). With MI, a borrower can put down as little as 5% – and in some cases, even less. |
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What is MI used for?Mortgage insurance protects the bank or lending institution if the homeowner stops making mortgage payments. When the unpaid principal balance of your loan reaches 80% of the home's original value, you can request cancellation of your MI.
Put less money down.Saving a 20% down payment can take a long time. With MI, you can qualify for a mortgage with less money up front.
More flexibility.Many homebuyers who could put 20% down prefer to use their money in other ways. MI helps them do that. |
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