Private mortgage insurance is a monthly premium lenders require when your down payment is less than 20% of the home's price. It protects the lender — not you — against the higher risk of default on a low-equity loan.
PMI typically costs 0.3%–1.5% of the loan per year and can be cancelled once you reach 20% equity through payments or appreciation. Reaching that 20% threshold is one reason a larger down payment lowers your monthly cost twice over.