Private mortgage insurance (PMI) is additional insurance you pay if you put down less than 20% on a conventional loan. It protects the lender (not you) if you default on your mortgage. PMI typically costs 0.5-1% of your loan amount annually, added to your monthly payment.

The good news? It's temporary. Once you reach 20% equity in your home through payments or appreciation, you can request to cancel it. While PMI adds to your monthly cost, it also makes homeownership accessible sooner by allowing smaller down payments.