PMI is an extra bit of protection for the lender. The first is the borrower's credit history. So the lender would review and analyze a person's current credit history and experience. We have to be comfortable that the collateral for the loan, the house itself, is really worth the amount still owed on it. When the real estate market was more volatile, some people would have the value of their home increase even before they moved into it.
People are more likely to walk away from a loan if the property declines in value.
Smith believes people should look at their houses as their homes, not just as investments. Now that you know what the lenders are looking for, here's where they expect to find it. While a tax return is a great source of financial information, it's not always required. A first-time buyer is anyone who hasn't owned a home in three years. So when lenders look at your tax returns they're looking to see if you've claimed the mortgage interest tax deduction over the last three years.