PMI is an abbreviation for Private Mortgage Insurance. In some areas, it is referred to Mortgage Insurance Premium – or MIP. PMI is provided by privately owned companies on loans with down payments less than 20% the purchase price. Some loans require PMI for the life of the loan. This insurance protects the lender if the borrower defaults on the loan. When getting pre-approved for a loan, be sure to ask the loan officer about PMI and if it can be removed when you reach a certain amount of equity.