PMI (Private Mortgage Insurance)
Also called: private mortgage insurance, mortgage insurance
Insurance on a conventional loan that protects the lender when the borrower has less than the program’s required equity.
PMI is typically required on a conventional loan above the program’s loan-to-value threshold. It is priced from credit and LTV, collected monthly, and protects the lender rather than the borrower.
Unlike FHA’s annual MIP, PMI can usually be removed, either automatically as the balance amortizes down, or on request once the equity threshold is met under the program’s rules, sometimes supported by a new appraisal.
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Related terms
- MIP (Mortgage Insurance Premium)The mortgage insurance charged on an FHA loan: an upfront premium plus an annual premium collected monthly.
- LTV (Loan-to-Value Ratio)The loan amount as a percentage of the property’s value, the main measure of how much equity cushions the loan.
- Down paymentThe share of the purchase price you pay in cash, becoming your starting equity in the property.
- Conventional loanA mortgage not insured or guaranteed by a government program such as FHA, VA, or USDA.
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