You have a home you buy for $100,000 and you use FHA 3.5% down. The have the bank is at risk for 96.5% of the purchase price, your loan, They will add mortgage insurance to your loan which will cover them on the difference.
If you buy that same home with 20% down instead of 3.5%, its not required.
As time goes by ans your equity builds, you can request that the mortgage insurance be dropped once you have 20% equity in the property. Banks give you hard time about this though, so make sure you can request it and if you get a mortgage through a credit union, its easier to drop because your a member/owner at a credit union.
A HouseSOLD Name
Southern Premier Realty