What is the difference between PMI and an 80/20 loan?

This ties back to my previous question, my friends are being told their monthly payments will be around $1200 for a $120K house using a 6.7% interest rate on a 30yr fixed. Seems impossible to me when comparing to amortization tables (I come up with 800/mo). Some of the answers told me the explanation could be... show more This ties back to my previous question, my friends are being told their monthly payments will be around $1200 for a $120K house using a 6.7% interest rate on a 30yr fixed. Seems impossible to me when comparing to amortization tables (I come up with 800/mo).

Some of the answers told me the explanation could be PMI which I know means "Private Mortgage Insurance" but not much other than that...

For my house I have a 80/20 loan since I put no downpayment and my rate is about $1300 a month, but my house was $185K

I don't understand how they could pay only $100 less than me for a house that costs so cheaper, so please explain this PMI and why they just cant get an 80/20 loan?
Update: Yes, I have two loans. One for 80% at 6.3% and one for 20% at 7.1%

I had 20% for a downpayment but decided to keep that cash for other purposes once I realized I could get two loans instead.
Update 2: Also, this is definitely for a 30 yr fixed, not a 20 or 15 loan.

Second, my tax rate in my county is slightly higher than theirs.
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