Also known as Private Mortgage Insurance (PMI), MI is required for borrowers with less than a 20% down payment on conventional loans, protecting the lender if the borrower defaults. MI enables qualified borrowers with smaller down payments to access mortgages. Borrowers pay an annual percentage of the loan amount, adding to homeownership costs, but PMI can be canceled once the loan balance reaches 80% of the home’s original value. For FHA loans, a Mortgage Insurance Premium (MIP) is mandatory regardless of down payment, with requirements varying by loan-to-value ratio and extending up to 11 years or the loan’s life.