Private mortgage insurance (PMI) is a premium a lender adds when your loan-to-value is high, typically above 80%, which means a down payment under about 20%. It protects the lender against loss if you default; it does not protect you or your equity. The cost is bundled into your monthly payment until you build enough equity to drop it.
PMI generally applies to owner-occupied conventional loans; pure investment-property financing is usually structured to avoid it by requiring a larger down payment instead. For a house-hacker buying a small multifamily to live in, though, a low-down-payment loan carrying PMI can be the cheapest way in. Because PMI is tied to loan-to-value, paying the balance down or rising value can eventually let you request its removal.
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Written and maintained by the Aptoria editorial team
Editorial method reviewed July 28, 2026. Aptoria reviews scope, source fit, examples, limitations, links, and publication gates. This record does not claim attorney, CPA, lender, appraiser, or other independent professional sign-off.
Professional review is not claimed. Verify current law, tax treatment, loan terms, valuation inputs, and property-specific facts with the appropriate qualified professional before acting.
Related terms
Investing metrics
LTV (loan-to-value ratio)
The loan amount as a percentage of a property's value — a core measure of leverage and lender risk.
Investing metrics
Amortization
The schedule by which a loan is paid off over time, with each payment split between interest and principal.
Financing
Mortgage refinance
Replacing an existing mortgage with a new loan, usually to lower the rate, change the term, or pull out built-up equity as cash.
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