Private mortgage insurance (PMI) is a type of mortgage insurance required on mortgage loans with less than a 20% down payment. PMI offers borrowers the ability to purchase their dream home without a 20% down payment. The loan type, credit score and loan to value ratio are taken into consideration when calculating the PMI premium, which is paid monthly as a portion of the total mortgage payment. PMI remains on the loan until there is sufficient equity in the home allowing the homeowner to request cancellation. At 78% Loan to Value, PMI is automatically terminated.