Define: PMI

UK Accounting Glossary

Definition: PMI



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Full Definition of PMI


PMI, or Private Mortgage Insurance, is insurance that indemnifies a lender against borrower default on a residential mortgage. The borrower pays the PMI insurance premium. In the US, PMI is typically required when the loan-to-value ratio, or LTV, of the loan, is greater than 80%. When home equity is lower than 20%, default risk increases, and PMI protects the lender. Many loans do not need PMI for a high LTV. For example, FHA and VA loans are guaranteed by the government and thus never need PMI. It is often up to the borrower to get the PMI policy cancelled once home equity reaches 20% to avoid having to continue to pay premiums. PMI regulations and practices vary from state to state and lender to lender. A local mortgage banker or mortgage broker should know PMI specifics that apply to a particular loan.


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To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
https://payrollheaven.com/define/pmi/
Modern Language Association (MLA):
PMI. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. April 03, 2020 https://payrollheaven.com/define/pmi/.
Chicago Manual of Style (CMS):
PMI. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/pmi/ (accessed: April 03, 2020).
American Psychological Association (APA):
PMI. PayrollHeaven.com. Retrieved April 03, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/pmi/

Definition Sources


Definitions for PMI are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 6th February 2020.