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

Private mortgage insurance (PMI) is a type of insurance that protects the lender if a borrower defaults on a mortgage loan. PMI is generally required if the borrower makes a down payment of less than 20% of the home's purchase price. PMI can add to the cost of a mortgage, but it can also make it possible for borrowers to purchase a home with a smaller down payment. The cost of PMI can vary depending on the size of the down payment, the loan amount, and the credit score of the borrower. It's important to carefully consider the cost of PMI when deciding on a mortgage, and to weigh the benefits of a smaller down payment against the longterm costs of PMI.