What Is Private Mortgage Insurance – Comparison of Top Providers

Understand private mortgage insurance (PMI), how it affects your loan, and how top PMI providers compare to help you make smarter home financing decisions.

Understanding Private Mortgage Insurance (PMI)

Private Mortgage Insurance (PMI) is a type of insurance that protects lenders in case a borrower defaults on a conventional home loan. It’s typically required when a borrower puts down less than 20% of the home’s purchase price. PMI does not protect the borrower directly, but it enables homebuyers to qualify for a mortgage without a large down payment.

Why PMI Exists

Lenders view borrowers with smaller down payments as higher risk. PMI mitigates this risk by covering a portion of the lender’s losses if the borrower defaults. This arrangement benefits buyers by making homeownership more accessible, even if they can’t afford a large upfront payment.

When Is PMI Required?

PMI is usually required for:

• Conventional loans with down payments under 20%

• Refinances where equity is less than 20%

It is not required for:

• VA loans

• USDA loans

• Some lender-paid programs (with higher interest rates)

How PMI Works

PMI can be structured in several ways:

• Monthly premium: Added to the mortgage payment

• Single upfront premium: Paid in full at closing

• Split premium: Combination of upfront and monthly payments

• Lender-paid PMI (LPMI): Included in a higher mortgage interest rate

Cost of PMI

PMI typically costs between 0.3% to 1.5% of the original loan amount per year. For a $300,000 mortgage, this equates to $900 to $4,500 annually, or $75 to $375 per month. The exact rate depends on your credit score, loan-to-value (LTV) ratio, and loan term.

How to Cancel PMI

PMI can be canceled in several ways:

• Automatic cancellation: When the mortgage balance reaches 78% of the home’s original value

• Request-based cancellation: When the balance reaches 80% and you have a good payment history

• Refinancing: If your home has gained value and your new loan-to-value ratio is below 80%

Pros and Cons of PMI

Pros

• Makes homeownership possible sooner

• Lower initial down payment

• Can be canceled or removed later

Cons

• Adds to monthly expenses

• Doesn’t protect the borrower

• Not tax-deductible in many cases

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Top Private Mortgage Insurance Providers Compared

To help you choose the best PMI provider, here’s a comparison of the most prominent private mortgage insurance companies based on coverage options, flexibility, financial strength, and customer satisfaction.

1. MGIC (Mortgage Guaranty Insurance Corporation)

Overview: MGIC is one of the oldest PMI providers and has a strong reputation in the mortgage insurance industry.

• Financial Strength: Rated A (Excellent) by A.M. Best

• Features:

  • Flexible premium options

  • Helpful online tools and calculators

  • Strong lender support network

• Pros:

  • Competitive rates

  • Good educational resources

• Cons:

  • Limited direct consumer engagement

2. Radian Guaranty Inc.

Overview: Radian is known for innovation and digital tools to streamline PMI.

• Financial Strength: Rated A (Excellent) by A.M. Best

• Features:

  • Customizable PMI options

  • Offers Radian MI Rate Finder tool

  • Strong mobile platform for lenders

• Pros:

  • Tech-savvy tools

  • Clear and transparent pricing

• Cons:

  • Rates may be slightly higher for lower credit scores

3. Genworth Mortgage Insurance (Now Enact)

Overview: Enact (formerly Genworth) provides robust PMI solutions with flexible cancellation terms.

• Financial Strength: Rated B++ (Good) by A.M. Best

• Features:

  • Wide range of premium plans

  • Strong training and resources for lenders

• Pros:

  • Excellent loan processing support

  • Streamlined claim processing

• Cons:

  • Slightly lower financial strength rating than competitors

4. Essent Guaranty, Inc.

Overview: Essent is a newer provider but has gained a strong foothold with modern underwriting practices.

• Financial Strength: Rated A (Excellent) by A.M. Best

• Features:

  • Focus on speed and simplicity

  • Offers a digital underwriting engine

• Pros:

  • Fast approval process

  • Easy integration for lenders

• Cons:

  • Limited history compared to older companies

5. National MI (NMI Holdings, Inc.)

Overview: National MI is known for its borrower-friendly policies and emphasis on transparency.

• Financial Strength: Rated A (Excellent) by A.M. Best

• Features:

  • Day 1 Certainty with Fannie Mae

  • Relief of rescission coverage

• Pros:

  • Competitive pricing

  • Strong borrower protections

• Cons:

  • Limited lender network compared to legacy providers

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PMI Provider Comparison Table

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Choosing the Right PMI Provider

When choosing a PMI provider, consider the following factors:

• Loan type and terms: Make sure the provider offers PMI compatible with your lender’s program.

• Premium flexibility: Monthly, upfront, or split options to fit your budget.

• Cancellation policies: Favor providers with borrower-friendly cancellation rules.

• Customer support and digital tools: Especially important if your lender gives you a choice.

• Lender relationships: Often, your lender picks the PMI provider, so check their preferred list.

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Tips to Minimize the Impact of PMI

1. Improve your credit score: Better credit often means lower PMI premiums.

2. Make a larger down payment: Even 15% instead of 10% can lower PMI costs.

3. Compare lenders: Some lenders negotiate better rates with specific PMI providers.

4. Refinance strategically: If your home value increases, refinance to eliminate PMI sooner.

5. Monitor your loan balance: Stay aware of when you qualify to cancel PMI.

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Final Thoughts

Private Mortgage Insurance is a necessary cost for many homebuyers who can’t afford a 20% down payment. While it adds to monthly costs, PMI also makes homeownership accessible. Understanding how it works and knowing the top providers can help you navigate this added expense more effectively. When selecting a PMI policy, look beyond just price—consider flexibility, cancellation options, and customer experience to make the best choice for your financial future.