Private mortgage insurance
Insurance the buyer pays that protects the lender if the buyer defaults. Usually required on conventional loans with less than 20% down. Drops off automatically at 78% loan-to-value.
Every term like this one lights up in the step you're on.
Free to set up. No credit card.Part 1 of 4
Why a seller cares
PMI is what a conventional buyer with under 20% down pays every month, and it is already in the payment they qualified for. For a seller it explains why a buyer with 5% down still closes on time.
Part 2 of 4
A simple example
A buyer puts 10% down on your $300,000 home. Their lender adds about $110 a month in PMI until the loan reaches 80% of value.
| The buyer's down payment | What it does |
|---|---|
| Under 20% | PMI on a conventional loan, paid monthly by the buyer |
| 20% or more | No PMI |
| Any of these | Nothing changes on your side of the closing statement |
PMI is the lender's insurance, paid by the buyer, and it is what makes small down payments possible.
Part 3 of 4
What people get wrong
That PMI protects the buyer. It protects the lender against the buyer's default; the buyer just pays for it.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · read against CFPB: what is private mortgage insurance? · how we research and check what we publish
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