The purpose of private mortgage insurance is to protect the lender in the event you default on your mortgage. If you’re unable to put a minimum 20% down payment on a conventional home loan, your lender will likely require you to pay PMI.
One strategy to avoid PMI involves getting an 80/10/10 loan where you put 10% down and take out a 10% home equity line of credit and use that to satisfy the 20% down payment requirement.
Some lenders offer loans that allow you to avoid paying PMI in exchange for a higher interest rate. You’ll need to go through a qualification process, but if approved, you’ll be allowed to put down less than 20%.
A savvier approach for a first-time homebuyer might be to buy a “starter home,” a less expensive one that they can comfortably afford without having to incur PMI.