If the thought of trying to save 20% for a down payment has been keeping you on the homeownership sidelines, here’s some good news. With private mortgage insurance (commonly referred to as “MI”), you can get a mortgage with a much smaller down payment.
On a $200,000 home, for example, you could qualify for a mortgage with as little as 3% or $6,000 down if you have a loan with MI. That is much easier to save than the 20% or $40,000 that would be required for a loan without it.
MI has flexible payment terms. There are a number of ways you can pay your MI premiums. Essent offers borrower-paid MI (BPMI) standard and deferred monthly plans, as well as a single-premium option. Lender-paid MI (LPMI) plans are also available. Read our PMI Q&As to learn more.
MI can be removed. Unlike FHA, you can ask your loan servicer to cancel your BPMI when you reach 20% equity in your home; BPMI automatically cancels when your equity reaches 22%. Removing BPMI can reduce your monthly mortgage payment or result in partial refund of your MI premiums, depending on the premium plan you selected. Read Removing PMI to learn more.
MI is tax deductible. Congress has extended the tax deduction for MI through 2016. (They have not yet made a decision on whether MI tax deductibility will continue for 2017.) You may qualify to deduct your MI premiums on your federal income taxes. Read our PMI Tax Deductibility Q&As to learn more.