Business Glossary

contract insuring a mortgage lender against default risk. Mortgage insurance allows a borrower to purchase a home with a down payment as low as 3 to 5% of the purchase price-even lessfor qualified borrowers-instead of the usual 20% down paymentlenders normally require. Insurance premiums are paid by the borrower.The Federal Housing Authority, an agency in the Department of Housing and Urban Development, insures mortgages on one-to-fourfamily houses and condominiums, and it reimburses the mortgage lender if default occurs. Mortgage insurance purchased from a commercial insurance carrier is known as