Private Mortgage Insurance (PMI) is insurance coverage that homeowners are required to purchase if they’re putting less than 20% down. PMI gives mortgage lenders a financial backup if a house falls into foreclosure because the homeowner couldn’t make their monthly mortgage payments.
Your mortgage provider will provide this insurance for you, and it will be included in your overall monthly payment. PMI will end on the date that your lender has calculated that your principal balance on your mortgage reaches 78% of the original appraised value of your home. Once 78% LTV is reached, the PMI is eliminated and your monthly mortgage payment may reduce.