the $300,000. At the time of purchase you could only afford to commit to a downSuppose over time you paid down the principat the lender requires you to obtain private mortgage insurance (PMI) on their behalf. payments (i.e., you default on the loan). If the lenter loan to $280,000 and at that point in time you can no longer make any mortaage loss of principal be taking into consideration lender were to foreclose on your property and sell it for $228,000, what would the lender's 30% of the loan) $72,000 $57,000 so $52.000