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MI – What does it do for me?

Regardless of the economy or individual circumstance, prudent consumers always want to know, "What does it do for me?" With MI, the benefits are many -- the ability to buy a home with a lower down payment, tax-deductible premiums for eligible borrowers, and a choice of payment options. By protecting the lender from loss in the event of borrower default, MI provides increased home loan opportunities.

Buy a home sooner with a lower down payment.

For many borrowers, the down payment – and the need to accumulate a large amount of cash (usually 20% of the property’s value) – is the biggest hurdle in the home buying process. But with MI, you may not need to wait until you've built up a 20% down payment. Many borrowers can qualify with a down payment as low as 5%.

MI is tax-deductible.

Besides the other tax benefits of owning a home, borrower-paid MI premiums are 100% tax-deductible through 2013 for eligible borrowers with adjusted gross incomes up to $100,000.

MI is flexible.

  • On a monthly premium plan, the mortgage insurance premium is incorporated into your overall loan payment each month – and you pay no upfront premium.

  • On an annual plan, you’ll pay an initial premium at closing and a renewal premium each year that follows.

  • With a single premium plan, the mortgage insurance premium is a one-time charge – paid in full at closing or financed into your loan – so you make no monthly premium payments.

Borrower-paid MI is cancellable.

The Homeowners Protection Act (HPA) requires that borrower-paid MI be cancelled automatically once the borrower has paid down the loan to an LTV of 78%, based on the original value of the property. And MI may also be cancelled at the borrower’s written request once the principal balance is paid down to 80% of the original purchase price. Find out more about a borrower’s right to cancel MI or read about the 11 Things You Need to Know About Cancelling Borrower-Paid Private Mortgage Insurance..

Borrowers should consult their tax advisors concerning applicability of this deduction to their circumstances under the Internal Revenue Code and the laws of any other jurisdiction. This information is not intended or written to be used, and it cannot be used, for the purpose of avoiding U.S. federal, state or local tax penalties.

Homebuyer Education Program

Locate a community organization in your area that offers pre-purchase counseling.
Learn More »

MI Tax Deductibility

MI is tax-deductible through 2013!

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