What is PMI and why do I have to pay it?

PMI (Private Mortgage Insurance) protects the lender if you default. It is required on conventional loans with less than 20% down payment. It costs 0.3-1.5% of your loan annually, added to your monthly payment.

How do I get rid of PMI?

You can request PMI removal when your loan balance reaches 80% of the original purchase price. Your lender must automatically cancel it at 78% LTV. You can also get a new appraisal to prove 20% equity from appreciation, or refinance.

Is FHA MIP the same as PMI?

No. FHA MIP (Mortgage Insurance Premium) is required on all FHA loans regardless of down payment and typically lasts the life of the loan. Conventional PMI can be removed at 20% equity. To remove FHA MIP, you must refinance to a conventional loan.

How much does PMI cost per month?

PMI typically costs $100-$300/month on a $300,000 loan, depending on your credit score, down payment, and loan type. Higher credit scores and larger down payments result in lower PMI rates.

PMI Explained: What It Is & How to Avoid It

Private Mortgage Insurance adds $100-$300/month to your payment. Learn what triggers PMI, how to remove it, and strategies to avoid it altogether.

What Is PMI?

Private Mortgage Insurance (PMI) is an insurance policy that protects the lender — not you — if you default on your loan. It is required on conventional loans when you put down less than 20%. PMI typically costs 0.3-1.5% of your loan amount per year, added to your monthly payment.

$100-$300

Typical Monthly Cost

0.3-1.5%

Annual Rate (% of Loan)

20%

Equity to Remove PMI

78%

LTV for Auto-Removal

PMI vs. FHA MIP — Key Differences

Feature	Conventional PMI	FHA MIP
When Required	Less than 20% down	All FHA loans
Annual Cost	0.3-1.5% of loan	0.55% of loan (typical)
Upfront Fee	None (usually)	1.75% of loan amount
Removable?	Yes, at 20% equity	Not for 30yr with <10% down*
Auto-Removal	At 78% LTV	No auto-removal*
Based On	Credit score + LTV	Same rate for all borrowers

*FHA MIP on 30-year loans with less than 10% down lasts the entire loan. With 10%+ down, MIP drops off after 11 years. Refinancing to conventional is the common solution.

How to Remove PMI

Request Removal at 80% LTV

Once your loan balance reaches 80% of the original purchase price, you can request PMI removal in writing. You must be current on payments with a good payment history.

Automatic Removal at 78% LTV

By law (Homeowners Protection Act), your servicer must automatically cancel PMI when your balance reaches 78% of the original purchase price — based on the original payment schedule.

New Appraisal Option

If your home has appreciated significantly, request a new appraisal. If the new value shows 20%+ equity, you can request PMI removal based on current market value (some lenders require 25%).

Refinance to Remove

If you have 20%+ equity, refinancing to a new conventional loan eliminates PMI. This is also the only way to remove FHA MIP on most FHA loans.

Ways to Avoid PMI Entirely

PMI Avoidance Strategies

Put 20% down — the straightforward approach; see our down payment guide
VA loan — zero PMI regardless of down payment; see VA loans
Piggyback loan (80-10-10) — 80% first mortgage + 10% second mortgage + 10% down = no PMI
Lender-paid PMI (LPMI) — lender pays PMI in exchange for a slightly higher rate (cannot be removed)
Credit union portfolios — some credit unions offer low-down-payment loans without PMI

Use our mortgage calculator to see how PMI affects your payment, or check today's rates.

PMI Explained — Private Mortgage Insurance