Do not treat the names as interchangeable
Private mortgage insurance, or PMI, protects the lender if a borrower cannot repay the mortgage. It does not replace homeowners insurance. Freddie Mac explains this distinction in its homebuyer guidance.
Homeowners insurance covers certain damage or losses involving your home and belongings, subject to the policy. Fannie Mae notes that coverage, limits and exclusions vary. Ask your insurance provider what your particular policy covers.
Check both costs on your Loan Estimate
CFPB's Loan Estimate explainer separates mortgage insurance from homeowners insurance and escrow. Review the estimated total monthly payment, not just principal and interest. Ask which expenses you must pay separately.
CFPB explains that a private mortgage insurer generally sets PMI premiums and is usually selected by the lender. You choose your homeowners insurance company. Confirm its premium with the provider instead of treating the lender's estimate as a final insurance quote.
Ask what applies to your loan
The agency resources explain the concepts; they do not determine the insurance requirement or charge for your individual application. Ask your lender which mortgage-insurance arrangement applies and how it affects your costs. Do not assume a general PMI explanation applies to every loan type.
For an existing mortgage, ask your servicer about any mortgage-insurance cancellation requirements. Do not stop paying a charge on your own or assume that a higher home value automatically removes it.
- Ask your lender to identify mortgage insurance and homeowners insurance separately.
- Compare the Loan Estimate with the insurance quote and your household budget.
- Ask your insurer about deductibles, exclusions and whether separate coverage is needed.
- Keep the lender's explanation and insurance documents with your loan records.
Source review
The official educational resources below were checked October 17, 2026. No publication or revision date was displayed in their retrieved page text; this review date records our check, not a new agency rule. This is general education, not individual loan or insurance advice. Preapproval is preliminary, and final approval depends on lender review.
General education only. This article does not offer a rate or guarantee loan approval. Loan options depend on your circumstances and lender review.