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Private Mortgage Insurance

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I am buying a townhouse in New Jersey. I found a mortgage company that says they will give a mortgage with no private mortgage insurance if I put down 15% downpayment, rather than the usual 20%. They insist that they do not charge higher interest rate because of it, nor do they charge higher closing costs. I've checked around and the quoted interest rate was lower than average, and their closing costs were in line with others. I've also checked their references with people who I personally know, and they checked out fine. My real estate agent insists that it's a federal law that you have to pay PMI if you don't put down 20%. She insists that I will have to pay this PMI either by paying PMI, or paying higher interest rate, or higher closing cost; and of course, she wants me to use her mortgage broker. My question is, what is the legal status of PMI regarding downpayments less than 20%? And is there an official site or document that I can consult regarding this?

Thank you for your time,


Senior Member
Your real estate agent is ignorant.
PMI is required on mortgage loans backed by government and sold on the secondary market to Fannie Mae and Freddie Mac etc. If the lender is a private lender that sells keeps the loan (portfolio) or sells the loan to private investment firms (Wall Street etc.) then it is the underwriting guidelines that must be followed by each lender. There is no Federal law that requires PMI for ALL loans, only certain type of loans.
Not all banks give the best rates. Mortgage brokers could indeed find a lender that does not require PMI if you put 15% down with rates and terms better than the banks. In fact if your credit score was high, say 660+, I know several lenders that would not require PMI with only between 5-15% down.

Why should you listen to an ignorant real estate agent.

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