What is PMI and how do I avoid it on a conventional loan?

Private Mortgage Insurance (PMI) is a monthly premium added to your conventional loan payment when your down payment is less than 20%. It protects the lender, not you. PMI is automatically removed once you hit 20% equity based on payments, or you can request cancellation when your home value rises. You avoid PMI from day one by putting 20% down, or in some cases by using a piggyback second mortgage. It's not always worth paying extra to avoid it — run the math first.