What Is Private Mortgage Insurance?
PMI is insurance required on most conventional loans with a down payment below 20%, protecting the lender — not the borrower — if the loan defaults.
Advanced Explanation
Private mortgage insurance protects the lender, not the borrower, on conventional loans with less than 20% equity. Under the Homeowners Protection Act, borrowers can generally request cancellation once the principal balance reaches 80% of the home's original value, and it generally terminates automatically at 78%, subject to payment-history and other conditions.