Definition
PMI is insurance a borrower pays for that protects the lender, not the homeowner, if the loan defaults. It's usually required when a buyer's down payment is under 20% of the purchase price, and it adds a noticeable amount to their monthly payment. PMI generally drops off once enough equity has built up in the home. For sellers, PMI mostly matters because it affects how much a financed buyer can realistically afford, which in turn shapes what offers you're likely to see on your home.
Example
A buyer putting down only 5% on a home paid roughly $120 a month in PMI on top of principal, interest, taxes, and insurance, which noticeably tightened his monthly budget. That extra cost factored directly into how much house the lender said he could realistically qualify for, capping his offer below what he originally hoped to pay. Understanding that helped the seller, Rita, see why his initial offer came in lower than a comparable 20%-down buyer's offer would have been. She asked her agent to explain the math, and once she realized PMI was eating into the buyer's monthly budget rather than reflecting anything wrong with her house, the lower number made a lot more sense. Rita ultimately negotiated a small price increase the buyer could still afford, and the sale closed on schedule a month later. She came away understanding that a buyer's financing structure, not just their stated price, shapes what they can actually offer.