Direct answer
What does Private mortgage insurance mean?
Insurance that protects a conventional mortgage lender against certain borrower default risk.
Exam cue: PMI protects the lender, even though the borrower commonly pays the premium.
What does it look like in a question?
New York example
A conventional loan with a high LTV may require PMI under the loan terms.
Common exam trap
What should you not confuse it with?
PMI is not homeowners insurance and does not protect the borrower's belongings.
Related real estate finance terms
AmortizationRepayment of debt through scheduled payments that reduce principal over time.Balloon paymentA final payment that is substantially larger than the preceding scheduled payments.Debt serviceThe scheduled principal and interest payments required on debt for a stated period.EquityThe owner's value in property after subtracting liens from the property's value for the calculation being used.ForeclosureThe legal process used to enforce a mortgage lien after default and subject the property to sale or another court-ordered remedy.Loan-to-value ratioThe loan amount expressed as a percentage of the applicable property value or price.
Sources used2 references with section locators
The curriculum citation confirms exam scope. Definition and rule citations support the explanation itself. Links and locators were checked on August 26, 2026.
Keep learning
Put the term back into its full subject.
A definition helps with recall. The subject guide shows how the rule interacts with documents, scenarios, calculations and practice questions.