What is mortgage insurance? - Progressive

Private mortgage insurance (PMI) protects your lender if you're unable to pay your mortgage loan. The cost of mortgage insurance is included in your mortgage payment for various loan types. Explore Progressive's editorial standards for Answers articles to find out why you can trust the insurance information you find here. Private mortgage insurance is insurance for the mortgage lender and won't cover your home in any way. Lenders view a mortgage loan with a smaller down payment as a riskier investment, and mortgage insurance provides a safeguard for the lender if you default on the loan. Because PMI protects the lender only, your lender gets to select the company that will provide mortgage insurance. Learn more about the difference between mortgage insurance vs. homeowners insurance. PMI costs vary, depending on your loan type, but plan to pay between 1% and 3% of your home's purchase price. PMI is often included in your mortgage payment. You may choose to pay PMI in one lump sum at the start of your loan. PMI is usually required as a condition of conventional mortgage loans if your down payment is less than 20%. For example, if the price of your new home is $200,000 and you're only able to pay $7,000 up front, then you may pay PMI because your down payment is only 3.5% of your home's purchase price. But if your down payment is greater then 20% of the purchase price, then you won’t typically have PMI. Mortgage insurance covers your lender, not you. That makes it an expense you'll want to avoid, if possible. Below are a few ways you can avoid PMI, if you're able. If you have a conventional loan, you may not have to pay PMI with a down payment of at least one-fifth of the home's purchase price. Often referred to as “piggybacking,” you can cap your first mortgage at 80% of your home's value and use a second mortgage to finance the rest. Lenders usually require a down payment of at least 10% for this option. If you're eligible for a VA loan, backed by the U.S. Department of Veteran Affairs, mortgage insurance isn't required. Same goes for USDA loans (United States Department of Agriculture). Keep in mind, FHA loans require mortgage insurance. Stay up to do date with your home's market value and monitor your mortgage balance. Once the balance of your loan falls below 80% of your home's value or purchase price, consider refinancing or contact your lender about eliminating PMI. Quote homeowners insurance online or call for advice Learn more about home insurance policies. See all articles by product Car insurance Home insurance Renters insurance Condo insurance Motorcycle insurance Boat & PWC insurance RV/Trailer insurance Life insurance Pet insurance Please note: The above is meant as general information to help you understand the different aspects of insurance. Read our editorial standards for Answers content. This information is not an insurance policy, does not refer to any specific insurance policy, and does not modify any provisions, limitations, or exclusions expressly stated in any insurance policy. Descriptions of all coverages and other features are necessarily brief; in order to fully understand the coverages and other features of a specific insurance policy, we encourage you to read the applicable policy and/or speak to an insurance representative. Coverages and other features vary between insurers, vary by state, and are not available in all states. Whether an accident or other loss is covered is subject to the terms and conditions of the actual insurance policy or policies involved in the claim. References to average or typical premiums, amounts of losses, deductibles, costs of coverages/repair, etc., are illustrative and may not apply to your situation. We are not responsible for the content of any third-party sites linked from this page. THE #1 INSURANCE WEBSITE Copyright 1995 - 2025. Progressive Casualty Insurance Company. All Rights Reserved. We offer insurance by phone, online and through independent agents. Prices vary based on how you buy. ΔDiscount varies and is not available in all states or situations. Insurance carrier website ranking by Keynova Group – Q4 2024 Online Insurance Scorecard. Progressive Home® policies are placed through Progressive Advantage Agency, Inc. with insurers affiliated with Progressive and with unaffiliated insurers. Each insurer is solely responsible for the claims on its policies and pays PAA for policies sold. Prices, coverages, and privacy policies vary among these insurers, who may share information about you with us. PAA's compensation from these insurers may vary between the insurers and based on the policy you buy, sales volume and/or profitability of policies sold. See a list of all the insurers that write Progressive Home policies, or contact us for more details.