PMI, also known as Private Mortgage Insurance, is a supplemental insurance policy you may pay for to protect your mortgage lender in the event of your default. PMI is provided by private (non-government) companies and is usually required when your loan–to–value ratio – the amount of your mortgage loan divided by the value of your home – is greater than 80 percent. PMI isn’t a bad thing – it allows lenders to accept lower down payments on homes than they would normally be comfortable with. But you may be paying PMI unnecessarily!