A couple outside looking at their new home

Home Financing Library

Low Down Payments and Mortgage Insurance

Mortgage insurance allows a potential buyer to obtain a mortgage without having to provide a 20% down payment. Loan officers may require insurance on loans with a down payment less than 20% of the home’s value in the event that the homeowner isn’t able to repay the loan. Mortgage insurance also provides home buyers with flexible payment options, since a large down payment is not always necessary. Although the cost of the mortgage insurance is often paid by the home buyer, or borrower, the mortgage insurer works directly with the loan officer. There are some loan products in which mortgage insurance is paid directly by the lender as well. Mortgage insurance is not the same as credit life insurance, also called mortgage life insurance. This type of policy repays an outstanding mortgage balance upon the death of the person who took out the insurance policy.