# Private Mortgage Insurance (PMI)

*Insurance — Finicade finance glossary*

PMI insures the lender, not you, against your default, and it's required on US conventional mortgages with less than 20% down. It typically costs 0.3–1.5% of the loan a year. Its removal is the part borrowers miss money on: it must be cancelled on request once you reach 20% equity, and cancels automatically at 22%, but rising home values only count if you request a new appraisal.

**Also known as:** PMI, mortgage insurance, MIP

**Related terms:** [Loan-to-Value Ratio (LTV)](https://finicade.com/glossary/loan-to-value-ratio), [Mortgage](https://finicade.com/glossary/mortgage), [Home Equity](https://finicade.com/glossary/home-equity), [Homeowners Insurance](https://finicade.com/glossary/homeowners-insurance), [Down Payment](https://finicade.com/glossary/down-payment)

Source: https://finicade.com/glossary/pmi