What is private mortgage insurance (PMI) and do I need it?

Private Mortgage Insurance (PMI) is a form of protection for lenders in case borrowers with a down payment less than 20% default on their mortgage. It is typically required for conventional mortgages. PMI allows borrowers to obtain a mortgage with a lower down payment, making homeownership more accessible. The cost of PMI varies based on factors like credit score and loan-to-value ratio. However, PMI is not always necessary. If the borrower can make a down payment of at least 20% or qualifies for other loan programs that do not require PMI, they may not need it. It is important to discuss options with a mortgage professional to determine if PMI is required or if alternative financing solutions are available.