Mortgage Glossary
Mortgage Insurance
Insurance that protects the lender if a borrower defaults on a low-down-payment loan.
Mortgage insurance protects the lender against loss if a borrower defaults, and it is generally required when the down payment is small.
On conventional loans it's called PMI; on FHA loans it's called MIP (Mortgage Insurance Premium).
Mortgage insurance can often be removed once you build sufficient equity, depending on the loan type and program rules.
Frequently asked
What's the difference between PMI and MIP?
PMI applies to conventional loans and can be removed at 20%–22% equity; MIP applies to FHA loans and may last the life of the loan depending on terms.
Is mortgage insurance tax deductible?
Deductibility has changed over the years — consult a tax professional for current rules.
Related terms
PMI (Private Mortgage Insurance)
Insurance that protects the lender when a conventional borrower puts down less than 20%.
FHA (Federal Housing Administration)
A government agency whose insured loans help buyers with lower credit or down payments.
LTV (Loan-to-Value Ratio)
The loan amount as a percentage of the home's value.