Mortgage Glossary
Mortgage Insurance
Defined by Onias Derilus, Mortgage Capital · NMLS# 1859012 · Florida licensed mortgage broker
Mortgage insurance protects the lender against loss if the borrower defaults, and is required on low-down-payment loans.
What Mortgage Insurance means
Conventional loans use private mortgage insurance (PMI) that cancels at 20% equity. Meanwhile, FHA loans carry their own premiums that often last the loan's life. The cost depends on credit and down payment.
Florida example
A Florida buyer putting 5% down on a conventional loan pays PMI until the balance reaches 80% of value, then requests cancellation. An FHA borrower instead pays MIP that usually doesn't drop off.
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