PMI stands for Private Mortgage Insurance. PMI is a type of insurance that is required by many lenders when a borrower puts down less than 20% of the purchase price as a down payment on a home.

The purpose of PMI is to protect the lender in the event that the borrower defaults on the loan. If the borrower defaults and the sale of the home does not cover the outstanding balance of the loan, the PMI will pay the difference.

PMI premiums are typically added to the monthly mortgage payment and can increase the overall cost of the loan. However, once the homeowner has built up enough equity in the home (typically 20% or more), they may be able to cancel their PMI and reduce their monthly mortgage payment.

If you are considering buying a home and have a small down payment, it's important to understand the costs associated with PMI and to compare the total costs of different mortgage options to find the best one for you. You may also want to consider other options, such as making a larger down payment or obtaining a different type of mortgage, to avoid the need for PMI