PMI and MIP
Private mortgage insurance, or PMI, is paid by the borrower to protect the lender's investment when the borrower makes a down payment of less than 20 percent on a home purchase, or when the borrower has less than 20 percent equity in a refinance.
But don't let the name fool you. The borrower pays the premium and the lender gets the benefit in the event of default. On a loan insured by the Federal Housing Administration, the borrower pays a mortgage insurance premium, or MIP.