◈ GLOSSARY · REAL ESTATE
PMI (Private Mortgage Insurance).
A definition, in plain English — with the books that teach it.
Reviewed by ClearValue Editorial Team · Jun 27, 2026
◈ DEFINITION
What it means
Definition
PMI is insurance you pay for that protects the LENDER (not you) if you default. On conventional loans it's required when your down payment is less than 20% (LTV above 80%). It typically runs 0.3%–1.5% of the loan amount per year. The good news: you can request PMI removal once your LTV drops to 80%, and it auto-cancels at 78%.
◈ IN PRACTICE
Example
A $360,000 mortgage at 0.6% annual PMI costs $2,160/year, or $180/month, on top of your principal, interest, taxes, and insurance. Pay the balance down to $320,000 and you can request removal.