What is mortgage insurance and when is it required?

Mortgage insurance makes it possible for you to buy a home with less than a 20% down payment. It protects the lender against the additional risk associated with low down payment lending. By purchasing mortgage insurance, lenders are comfortable with down payments as low as 3% to 5% of the home’s value. It also provides you with the ability to buy a more expensive home than might be possible if a 20% down payment were required.