06/11/2026
PMI stands for Private Mortgage Insurance 🏡
It’s an extra monthly cost some buyers pay when they put down less than 20% on a home loan.
Here’s the simple breakdown:
* If you put 20% or more down → no PMI
* If you put less than 20% down → PMI is usually required
💰 Why it exists:
PMI protects the lender (not the buyer) in case the loan isn’t repaid. Since the lender is taking more risk with a smaller down payment, they add that insurance cost.
📊 What it means for you:
* It increases your monthly payment
* It does NOT go toward your principal or build equity
* In many cases, it can be removed once you reach enough equity in your home
🧠 Simple way to think about it:
PMI is basically the “cost of getting into a home sooner with less money down.”