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Mortgage insurance

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Definition

Mortgage insurance is coverage that protects the lender, not the borrower, if the loan is not repaid. It can take more than one program form. Private mortgage insurance is one common form on conventional loans.

In plain English

Mortgage insurance is not homeowners insurance. It does not repair the house. It reduces the lender’s credit loss if the borrower fails to repay. On many conventional loans the familiar form is private mortgage insurance, already explained on its own US Mortgage Index page. FHA and other programs use different premium structures. Those are related products, not this page’s only meaning.

Technical definition

Consumer glossaries describe mortgage insurance as protection for the lender against borrower default. Freddie Mac’s heading MI names an approved insurer, not this consumer product, and is not used as evidence here.

Why it matters

Readers seeing “MI” on a disclosure need to know whether the page means the consumer product, a program premium, or an insurer name.

Commonly confused with

Related mortgage FAQ: What is mortgage insurance and how does it work?

Sources reviewed

Important note

This concept is broader than private mortgage insurance. It is not PMI, not FHA MIP, and not the Freddie Mac insurer abbreviation MI.

Cite as

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