In real estate finance, M.I.P., or mortgage insurance premium, refers to the cost paid for insurance that protects a mortgage lender against losses resulting from borrower default. This insurance reduces the lender’s risk and makes it possible to approve loans with a higher loan to value ratio than would otherwise be permitted.
Mortgage insurance premiums are most commonly associated with government backed loan programs. In the United States, this form of insurance is provided through federal agencies such as the Federal Housing Administration and the Department of Veterans Affairs. By shifting some of the default risk away from the lender, M.I.P. helps expand access to financing for borrowers who may not meet conventional lending requirements.
