PMI is Private Mortgage Insurance. It protects your lender against non-payment should you default on your loan. If you default on your loan, then your lender is protected. You pay the premiums, but the lender gets the benefit if you default. Lenders normally require you to carry pmi insurance if you make a down payment of less than 20 percent. If your home equity ever rises above 20 percent of your mortgage, then this insurance can be canceled.