Private mortgage insurance

Insurance the buyer pays that protects the lender if the buyer defaults. Usually required on conventional loans with less than 20% down. Drops off automatically at 78% loan-to-value.

Also called PMI · Financing · Updated September 2026

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Where this comes up: on the market

This word belongs to the on the market part of a sale. Here is what that part holds, in order.

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Part 1 of 4

Why a seller cares

PMI is what a conventional buyer with under 20% down pays every month, and it is already in the payment they qualified for. For a seller it explains why a buyer with 5% down still closes on time.

Part 2 of 4

A simple example

A buyer puts 10% down on your $300,000 home. Their lender adds about $110 a month in PMI until the loan reaches 80% of value.

Private mortgage insurance: a simple example
The buyer's down payment	What it does
Under 20%	PMI on a conventional loan, paid monthly by the buyer
20% or more	No PMI
Any of these	Nothing changes on your side of the closing statement

PMI is the lender's insurance, paid by the buyer, and it is what makes small down payments possible.

Part 3 of 4

What people get wrong

That PMI protects the buyer. It protects the lender against the buyer's default; the buyer just pays for it.

Part 4 of 4 · where to read next

Where it appears in the sale

On the marketOn the market · the stretch of the sale this word belongs to

What a definition is, and what it isn't

Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.

Written and researched by Keighbor Research · read against CFPB: what is private mortgage insurance? · how we research and check what we publish

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