PMI (Private Mortgage Insurance)
Insurance you pay to protect the lender when your down payment is under 20%. It protects them, not you — and you can drop it once you hit 20% equity.
By Findley's Finance · Last reviewed: September 2026
Why it matters
PMI is a tax on small down payments, often $100–$300 a month on a typical home, buying you nothing but the right to borrow. You can request cancellation at 20% equity and it must drop automatically at 22%. This is why the 20% down payment target exists — not as a rule, but as the line where this monthly penalty disappears.