Definition
Insurance protecting the lender, charged when a down payment is under 20%. You can request removal at 20% equity, and it must end automatically at 22%; until then it is pure cost to you.
Why it matters
PMI buys access to homeownership without a 20% down payment, but it protects the lender with your money. Knowing the removal rules converts it from a permanent fee into a temporary toll.
Example
On a $250,000 loan, PMI at 0.5% costs about $1,250 a year (~$104 a month). After appreciation and payments push equity past 20%, the owner requests removal and keeps the $104 from then on.
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.