PMI (Private Mortgage Insurance)
Insurance that protects the lender if you default — required when you put less than 20% down.
PMI typically costs 0.3-1.5% of the loan amount annually. You can request its removal once your LTV reaches 80%, and lenders are required to drop it automatically at 78% LTV. FHA loans have a similar product called MIP that often can't be removed.
Related
- LTV (Loan-to-Value) — Loan amount divided by home value, expressed as a percentage.
- Down payment — The cash you pay up front toward a home purchase.