Quote:
Originally Posted by you&me
Maybe I'm misunderstanding this, so maybe someone can help me out - why are the qualifying standards for uninsured mortgages stricter than insured?
To me, it seems that if someone is able to come up with >20% down, they're a more stable candidate than someone that scrapes together ~5%?
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Mortgage insurance means the lenders is covered if there is a default (the insurance is more for them, not the borrower, since the borrower is legally liable for any shortfall that insurance has to pay out IIRC).
That's not the case for a conventional (uninsured) mortgage, where the only remedy for the lender is to sell the property (and hopefully that is enough to cover the remaining principal, but the risk is that it isn't).