PMI (Private Mortgage Insurance)
Insurance often required on a conventional loan above 80 percent LTV, protecting the lender if the borrower defaults.
Quick flashcard
What does PMI (Private Mortgage Insurance) mean on the Texas real estate exam?
Answer: Insurance often required on a conventional loan above 80 percent LTV, protecting the lender if the borrower defaults.
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PMI (Private Mortgage Insurance) definition
Private mortgage insurance protects the lender, not the borrower, against loss if the borrower defaults. Many conventional purchase loans require PMI when the down payment is less than 20 percent, which places the original loan-to-value ratio above 80 percent.
For a mortgage covered by the federal Homeowners Protection Act, a borrower may request cancellation at the scheduled 80 percent point if the statutory conditions are met. The servicer generally must terminate PMI automatically on the date the principal balance is scheduled to reach 78 percent of the home's original value if the borrower is current.
Source basis
Definition checked against the official sources below on .
On the exam
Exam trap
Tested in
Financing & Settlement (7 of 80 National)
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Try 5 free questionsThis definition is Texas real estate exam-prep education, not legal, tax, or professional advice. Verify current rules against the official source before relying on them for a real transaction. Back to the full glossary.