PMI (Private Mortgage Insurance)
Lending & MortgagesInsurance required by lenders when a borrower puts down less than 20%, protecting the lender against default.
Example
Example: You buy a $400,000 home with 10% down ($40,000). PMI on the $360,000 loan costs approximately $150/month. You pay PMI until your loan balance drops to $320,000 (80% of home value) — roughly 6 years with regular payments. Making $200/month in extra principal payments shortens PMI to about 4 years, saving $3,600.