What is Private Mortgage Insurance (PMI) and when is it typically required?

PMI (Private Mortgage Insurance) is required by most conventional lenders when your down payment is less than 20% of the purchase price (LTV above 80%). It protects the lender, not the buyer, in case of default. PMI typically costs 0.5 to 1.5% of the loan amount per year. Once you reach 20% equity, you can generally request its removal.