What is mortgage guaranty insurance (MI)?
Mortgage guaranty insurance or private mortgage insurance (MI) is insurance that is provided by an MI company to protect mortgage lenders against loss if a borrower defaults on an insured mortgage loan. MI allows a homebuyer to make a smaller downpayment than the 20 percent usually required by lenders, allowing them to purchase a home sooner than it might have been possible without MI. Most lenders require MI for a loan with a loan-to-value (LTV) percentage in excess of 80 percent.
