PMI is the acronym  for "Private Mortgage Insurance", and is sometimes also referred to as "Primary Mortgage Insurance". It is insurance required by a lender for your home loan when you do not have a  twenty percent downpayment, which is considered a conventional loan. Buyers with less than 20% downpayment who require an 80% or more LTV loan (loan to value ratio) are almost always required to purchase this insurance for the lenders protection against a possible default on your primary mortgage.
 
Lenders typically look at a loan with over 80%  LTV as a riskier investment and  will require a PMI payment from the borrower. It is a special insurance that lenders force higher risk borrowers to pay to protect the interests of a bank in case of default.

A benefit of PMI is that it with this type of insurance, it is possible for you to buy a home with as little as a 3 percent to 5 percent down payment, when otherwise it would not have been possible. This means that you can buy a home sooner without accumulating a larger down payment.

Use the handy chart to the left  to estimate what your monthly PMI payment will be  for your thirty year mortgage loan. Your mortgage broker or banker will give you the actual monthly payment, and this chart is meant to be used as a rough guide.