What Is PMI?
PMI is one of the most misunderstood parts of a mortgage. Here's what it actually is and how it works in your favor and against it.
What PMI does
Private mortgage insurance protects the lender if a borrower with less than 20% down stops paying. It's what makes low-down-payment conventional loans possible in the first place.
Removing it over time
On conventional loans, PMI is not permanent. As you build equity toward 20%, you can request removal, and it typically ends automatically at 22% equity based on the original value.
Key takeaways
- PMI enables low-down-payment conventional loans.
- It protects the lender, not the borrower.
- It's removable as you build equity.
Test your knowledge
3 quick questions. Score 70% or higher to complete this lesson.
1. Who does private mortgage insurance (PMI) protect?
2. PMI generally applies when your down payment is:
3. On a conventional loan, PMI typically falls off automatically at:
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Written by
Joel Olson
Founder, Blueprint Home Loans LLC · Florida Mortgage Broker · Individual NMLS #1410944
Joel founded Blueprint Home Loans on an education-first philosophy: help buyers understand their options and make confident, informed decisions. With more than 20 years in financial services, his goal isn't to sell a mortgage. It's to build a plan around your life.
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This lesson is educational and is not a commitment to lend, financial advice, or a guarantee of approval. Program guidelines, rates, and eligibility vary by lender, location, and individual circumstances and change over time. Speak with a licensed mortgage professional for guidance specific to your situation.
Finished “What Is PMI”? Here's what's next
- How Conventional Loans WorkWhy: Builds on what you just read with “How Conventional Loans Work.”
- Building Equity Over TimeWhy: Builds on what you just read with “Building Equity Over Time.”
- Conventional LoansWhy: See how this applies inside “Conventional Loans.”
- Monthly Payment CalculatorWhy: Put real numbers behind it with the “Monthly Payment Calculator” tool.
Last reviewed July 2026. Educational information only, not a commitment to lend, a rate quote, or a guarantee of approval. Blueprint Home Loans LLC is licensed in Florida; loan program rules are federal and apply nationally.