Mortgage Glossary
Private Mortgage Insurance
Also called: pmi, mortgage insurance, mi
Definition
Insurance that protects the lender when a conventional loan is made with less than 20% down. The borrower pays for it, monthly or through pricing adjustments.
Why it matters
PMI is usually removable on conventional loans as equity builds, which is not true of FHA mortgage insurance in most cases.
Related terms
- Loan to Value
- The loan amount divided by the property value. A $200,000 loan on a $250,000 home is an 80% LTV.
- Equity
- The difference between what your home is worth and what you still owe on loans secured by it.
- FHA Loan
- A mortgage insured by the Federal Housing Administration, often used for lower down payments or more flexible credit profiles. FHA charges both upfront and annual mortgage insurance.
Written by
Manny Oloyede, Mortgage Broker
NMLS #1824463 | Ultimate Mortgage Brokers LLC NMLS #2619461 | Licensed in OH | KY | NC | PA | SC | TN | TX
I have worked in mortgage lending since 2018 out of the Akron / Cuyahoga Falls Branch, helping buyers, homeowners and investors across Northeast Ohio and every state where I am licensed. These guides reflect the questions I answer most often, written the way I would explain them on a call.
General education only, not financial, legal or tax advice, and not a commitment to lend. Guidelines vary by program and change over time. Manny Oloyede, NMLS #1824463. Ultimate Mortgage Brokers LLC, NMLS #2619461. Licensed in OH | KY | NC | PA | SC | TN | TX. Equal Housing Opportunity.
Want this applied to your actual numbers?
Definitions are the easy part. What matters is how the guideline reads against your income, credit and property.