Mortgage insurance, in layman’s terms, is a type of insurance that protects the lender if a borrower defaults on a mortgage loan. Borrowers with a down payment of less than 20% usually need mortgage insurance to reduce lender risk. In exchange, the borrower can secure a loan even without a large initial down payment. Mortgage insurance is commonly required for government-backed loans and can be paid monthly or as a one-time premium, which is often included in the total mortgage payment.