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Do You Need Private Mortgage Insurance? Here’s the Answer | Valor Lending Group

Private Mortgage Insurance (PMI) plays a critical role in conventional home loans, often surprising first-time buyers. Understanding PMI can greatly affect your mortgage journey, especially if you want to buy a home with less than 20% down. Do You Need Private Mortgage Insurance? Here’s the Answer will cover all the essentials, making PMI easier to navigate and understand.

Do You Need Private Mortgage Insurance? Here’s the Answer

Private Mortgage Insurance (PMI) is a crucial aspect of conventional home loans that protects lenders if a borrower defaults. Typically, PMI is required for buyers with a down payment of less than 20% of the home’s purchase price. It’s not just for conventional loans; FHA loans also include a form of PMI, though there are important distinctions between the two.

With Conventional PMI, the insurance is temporary and drops off once your loan reaches an 80% loan-to-value (LTV) ratio, lowering your monthly payment. In contrast, FHA PMI usually remains for the entire loan term unless you refinance when your home’s value hits 80% LTV or you pay off the mortgage completely.

Arranged by your lender through private insurers, PMI is part of your monthly mortgage payment along with principal, interest, property taxes, and homeowners insurance. Unlike these components, PMI doesn’t build home equity; it solely provides lender protection while you build yours.

In short, understanding PMI is essential for making informed decisions on your mortgage. Knowing the details of PMI for both conventional and FHA loans can help you better manage your mortgage, potentially saving money over time.

Private Mortgage Insurance (PMI)

Private mortgage insurance, or PMI, is insurance typically required for conventional loans when the loan amount exceeds 80% of the property’s value at the time of purchase. For conventional loans, PMI can be removed once you’ve built at least 20% equity in your home.

Borrower Paid Mortgage Insurance (BPMI)

This option involves a fixed premium added to your monthly mortgage payment.

Lender Paid Mortgage Insurance (LPMI)

With LPMI, the monthly premium is waived, often resulting in a lower monthly payment overall. However, this comes with a slightly higher interest rate.

More information about PMI can be found here.

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At Valor Lending Group, we specialize in fast-hard money loans up to $10MM, with funding available in as little as 7 days—often without the need for an appraisal.

We offer a vast array of loan programs tailored to your needs. Explore our options by CLICKING HERE, and don’t hesitate to CONTACT ME for any loan scenarios. I’m committed to delivering prompt, professional service that goes above and beyond your expectations.

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And many more.

We do them all, so give me a call!

Recap of Our Loan Products:

1. Private Money Loans (20% down / minimal documentation) Typically, funds in 7-10 days
2. Stated Income Loans (Great for business owners and self-employed) No tax returns!
3. 100% financing is available (we can cross-collateralize other properties if there is enough equity)
4. Valor VA Home Loan 100% financing up to $2.5MM
5. Investor Cash Flow Loan – No tax returns or DTI calculation! Based on the subject property’s cash flow
6. Flipper & Rehab Loans (Flip a property with one of our many options)
7. 2nd Position Loans up to $5MM
8. Raw Land & Lot Loans
9. Ground-up Construction for spec homes, custom homes, and commercial ground-up.
10. Farms, Vineyards, Ranches and Agricultural Properties (25-30% down)
11. 10% down Jumbo’s up to $1.5MM
12. Manufactured Housing / Mobile Homes (20% down / 600+ credit score)
13. Acreage Properties
14. Commercial Loans up to $500MM
15. 3% & 5% down Conventional Loans– LPMI (Lender paid mortgage insurance)
16. Foreign Nationals Loans (no social security or residency required)

We Also Offer:

1. 10, 15, 20, 25, 30 years Fixed, Conventional Conforming Loans
2. High Balance Conforming aka Super Conforming
3. Jumbo’s to $10 MM / 10% down Jumbo to $1.5MM
4. FHA, USDA
5. ARM’s
6. Reverse mortgages up to $1MM Value
7. Refinance including Cash Out

**Rates and terms are subject to change without notice