Mortgage insurance is a type of insurance that protects lenders in case a borrower defaults on their home loan. It is often required for buyers who make a down payment of less than 20% of the home's purchase price. This insurance helps reduce the risk for lenders, making it easier for people to qualify for a mortgage even if they have a smaller down payment. There are two main types of mortgage insurance: Private Mortgage Insurance (PMI) and Federal Housing Administration (FHA) insurance. PMI is typically used for conventional loans, while FHA insurance is required for FHA loans. Both types of insurance add an extra cost to monthly mortgage payments, but they can help buyers achieve homeownership sooner.