What is PMI and why do lenders require it?

PMI, or private mortgage insurance, protects the lender if a borrower defaults on a conventional loan made with a smaller down payment. Lenders require it because a lower down payment leaves them more exposed if the home has to be sold at a loss. It gets added to your monthly payment and can typically be removed once you build enough equity, either through payments or appreciation. Ask your lender exactly what equity level cancels it and how to request that removal.