What is PMI?
PMI, Private Mortgage Insurance, is often required by a mortgage lender if your down payment is less than 20% of the purchase price of the home. It is an insurance policy that the lender takes out on you and protects them if you were to default on your loan. When you have PMI on your home loan, you are responsible to pay the PMI premium in monthly installments on top of your regular monthly mortgage payment.
While it may seem like PMI is an extra burden, its benefit is that it allows you buy a home without having to wait to save more money for a 20% down payment.