Mortgage insurance (MI) is required for conventional loans with a down payment of less than 20%, as well as FHA and USDA loans. It protects lenders against default but does not benefit the borrower directly. MI can be canceled when the loan balance reaches 78% of the home's original value, or borrowers can request cancellation at 80% if they meet certain criteria, including a satisfactory payment history. Understanding MI is crucial for first-time homebuyers seeking low down payment options.