When you put less than 20 percent of the purchase price down on a home, your lender will charge you for the cost of placing a private mortgage insurance, or PMI, policy on your home loan. Though the borrower pays for it, the policy actually protects the lender in the event that the borrower defaults on the loan-a risk that is statistically more likely to damage the lender’s interest when there is little equity in the property. It usually equals 1/2 to 1 percent of the mortgage. This is an annual basis on all HFA loans longer than l5 years, but is billed to the borrower in monthly payments. Lenders are required by law to cancel mortgage insurance once the loan amount is at or below 78 percent of the original value of your home-its value at the time you bought it.