For many people, saving a down payment of 20% can be a significant barrier to buying a home. In fact, studies have shown that it can take 10+ years, given the average income and home price in the U.S.

Private mortgage insurance (MI) puts home ownership in reach for millions of qualified borrowers because it helps them to obtain mortgages with smaller down payments – as little as 3% in some cases —  while also protecting lenders and investors from losses if those borrowers default on their mortgages. 

MI not only offers borrowers lower down payments, it also offers them: 

• Flexible payment options. MI can be paid in multiple ways, giving borrowers greater flexibility. We offer borrower-paid, lender-paid and split premium insurance plans.
• Cancellability¹. Unlike FHA, borrower-paid MI can be canceled when borrowers reach 20% equity (80% LTV) in their homes:
  • by paying down the mortgage principal,
  • as a result of rising home values due to favorable market conditions, or
  • by making certain home improvements. 

MI cancels automatically when borrowers reach 22% equity (78% LTV) through normal amortization or when the halfway point of their loan term is reached. Read How To Remove PMI to learn more. 

Refer to Sections 10.0 and 11.0 of the Essent Client Services Guide for information regarding cancellation of MI coverage and refunds of premium depending on the Premium/Product Plan selected and Source of Premium Payment.

¹ Homebuyer-requested cancellation at 80% LTV is subject to lender requirements. Automatic cancellation at 78% is subject to the Homeowners Protection Act (HPA) of 1998.