What is PMI and Does My USDA Loan Require It?
PMI stands for Private Mortgage Insurance.
For traditional mortgages - the lender will require homebuyers who are financing more than 80 percent of their home’s appraised value to purchase PMI. In a basic sense, buyers who do not put down at least 20 percent are required to pay PMI on a traditional mortgage.
The benefits of PMI for a traditional mortgage are two-fold:
- It protects the lender in the event that the borrower defaults on the loan
- It enable homebuyers to purchase property with less available cash
USDA Loans Do Require a Small Amount of Mortgage Insurance
When seeking a USDA Home Loan, or Rural Development Home, a small mortgage insurance is required. The insurance is much less than other loans offered. For a USDA Loan the monthly mortgage insurance is .4%
With low monthly mortgage insurance costs, the overall monthly payments on these Rural Development loans are often lower when compared to a traditional loan.
Do you have questions? Contact the USDA Loan Agency or fill out the form to your left and a Certified USDA Loan Assistant will contact you.