Private Mortgage Insurance (PMI) Legal Meaning and Definition

Here is a simplified definition of the legal term Private Mortgage Insurance (PMI).

Private Mortgage Insurance (PMI) noun

Private Mortgage Insurance, known as PMI, is a type of insurance policy taken out by a mortgage lender. This insurance is designed to protect the lender in case the borrower fails to make their loan repayments. If this happens, PMI compensates the lender for the money not repaid by the borrower. Normally, PMI is required when the borrower puts down less than 20% of the home's price as a down payment.