PMI (Private Mortgage Insurance)

Insurance that lenders require when the down payment is less than 20% of the home's value. PMI protects the lender, not the borrower, and is automatically cancellable once LTV reaches 80%.

PMI protects the lender against loss, yet the borrower pays for it — usually as a monthly add-on to the mortgage payment. Once the loan’s balance falls to 80% of the original value, borrowers can request cancellation, and it drops off automatically at 78%.