Key perspective
Mortgage default insurance protects the lender, not the borrower. It can allow eligible borrowers to purchase with a smaller down payment, while introducing qualification rules and an insurance premium.
What mortgage default insurance does
When the down payment is below the conventional threshold, an eligible mortgage may require default insurance through an approved insurer. The premium is commonly added to the mortgage balance, although applicable tax treatment and closing costs should be reviewed separately.
Insured, insurable and uninsured
These labels affect lender funding, pricing and eligibility. A mortgage may be conventional from the borrower’s perspective yet still qualify as insurable for the lender. Refinances and certain property or amortization structures may be uninsured.
Rules change
Program limits, qualification criteria and premiums can change. Borrowers should verify current rules for their transaction date rather than relying on an older article or past approval experience.