PMI (Private Mortgage Insurance) is a real estate term you will encounter when buying or selling a home in Ventura County. This page gives you a plain-English definition and explains why it matters.
What it means
PMI lets buyers purchase with a smaller down payment by reducing the lender's risk. It is usually paid as a monthly amount added to the mortgage payment and can often be canceled once the loan balance falls to a certain percentage of the home's value. PMI applies to conventional loans; government loans like FHA and VA have their own insurance structures.
Why it matters to buyers and sellers in Ventura County
For Ventura County buyers who do not have a full 20% down payment, PMI makes it possible to buy sooner. Understanding when PMI can be removed helps buyers reduce their payment over time. Brian helps buyers weigh down payment options and the cost of PMI.
Frequently Asked Questions
When is PMI required?
On conventional loans, PMI is generally required when the down payment is less than 20% of the purchase price.
Can PMI be removed?
Yes. PMI on a conventional loan can usually be canceled once the loan balance reaches a set percentage of the home's value, subject to lender rules.
Is PMI the same as FHA mortgage insurance?
No. PMI applies to conventional loans, while FHA loans have separate mortgage insurance premiums with different rules.
