What PMI does to a mortgage payment.
Private mortgage insurance can increase the monthly cost of some conventional mortgages when the borrower starts with less equity. It protects the lender, not the homeowner.
Smaller down payment, more lender risk
When a borrower makes a smaller down payment, the lender has less borrower equity protecting the loan at origination. PMI is one way that risk can be insured on certain conventional loans.
The actual premium depends on the loan, borrower profile, insurer, and lender terms. Government-backed mortgage programs use different insurance structures and terminology.
It changes the monthly number
A lower down payment can preserve cash but may add mortgage-insurance cost. Compare both the upfront cash requirement and the recurring payment.
It may not last forever
Depending on the loan and applicable rules, mortgage insurance may later be cancellable or terminate after sufficient equity is reached. Confirm the actual rules with the servicer or lender.
Do not assume 20% down is automatically best
Avoiding PMI can reduce recurring cost, but using more cash for a down payment also reduces liquidity. The stronger decision depends on the full financial picture.