PMI stands for Private Mortgage Insurance. This is usually charged to the borrower on loans where the loan amount exceeds 80% of the appraised value of the home. Most lenders want insurance on loan amounts greater than 80% of the homes value due to the risk associated with these loans. The lender has less risk on a loan amount at 80% of the homes value, than at 85, 90, or 95% of the homes value.