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Financing guide · PMI cost and removal

Mortgage Insurance (PMI): What It Costs and How to Remove It

Private mortgage insurance (PMI) is required on a conventional loan when you put down less than 20%. It protects the lender, not you, and typically costs about 0.3% to 1.5% of the loan per year depending on your down payment and credit, added to your monthly payment. You can remove it: request cancellation once you reach 20% equity (80% loan-to-value) on the original schedule, and the lender must cancel it automatically at 78% loan-to-value under the federal Homeowners Protection Act. If your home's value has risen, a new appraisal can get you to 20% equity faster. FHA mortgage insurance works differently and often lasts the life of the loan when you put down less than 10%. A no-MI program, like a 40-year loan, is one way to skip it entirely.

What private mortgage insurance costs, and the exact ways to get it off your payment. Straight answers below, and a calculator that runs your numbers with today's averages.

Run your numbers

Purchase price$1,000,000
Down payment (0% allowed)20% · $200,000
Mortgage Insurance (PMI) est. payment$4,991/mo

Principal & interest at 6.375% (avg 6/24/2026) over 30 years on $800,000. Taxes, insurance, and any mortgage insurance or program fees not included. Informational only, not a commitment to lend.

How it works

Under 20% down

PMI is added

On a conventional loan, PMI is built into your monthly payment until you reach 20% equity.

At 20% equity

Request cancellation

Once you are at 80% loan-to-value, ask your servicer in writing to cancel PMI. A current loan and good history qualify you.

At 22% equity

Automatic removal

At 78% loan-to-value, federal law requires the lender to drop PMI on its own, no request needed.

Why it wins

1

PMI protects the lender, not you.

It is simply the price of putting less than 20% down on a conventional loan. The good news: it is temporary, and there are clear, legal ways to get it off your payment.

2

It can come off at 20% equity.

Once you reach 80% loan-to-value on the original schedule you can request cancellation in writing. At 78% the lender must cancel it automatically, by federal law.

3

A rising market speeds it up.

If your home is worth more than you paid, a new appraisal showing 20% equity can drop PMI years early, without waiting to pay the balance down.

4

Or skip it entirely.

Lender-paid MI, a piggyback loan, or a no-MI program avoids PMI from day one. Our 40-year program carries none, even under 20% down.

The numbers

Under 20% down

When PMI applies

required on a conventional loan until you reach 20% equity

0.3-1.5%/yr

Typical cost

of the loan amount per year, by down payment and credit, added to the payment

78% LTV

Automatic removal

the lender must drop PMI here by federal law (Homeowners Protection Act)

$0 MI option

No-MI programs

some programs, like a 40-year loan, carry no mortgage insurance even under 20% down

PMI applies to conventional loans under 20% down; it comes off by request at 20% equity, automatically at 22%, or via a new appraisal when your value rises.

Who it fits

Conventional buyers putting less than 20% down, and homeowners who have built equity and want PMI off their payment.

  • Conventional buyers putting down less than 20% who want to know the real cost.
  • Homeowners who have built equity and want PMI off their monthly payment.
  • Buyers weighing a low-down conventional loan against an FHA loan or a no-MI program.
  • Anyone whose home value has climbed and could re-appraise to 20% equity.

Straight answers

Private mortgage insurance protects the lender if you default. It is required on a conventional loan whenever your down payment is under 20%, and it is added to your monthly payment. It does not protect you or your equity.

Usually about 0.3% to 1.5% of the loan amount per year, divided into your monthly payment. The exact rate depends mostly on your down payment (less down means more) and your credit score.

Three ways. Request cancellation once you reach 20% equity (80% loan-to-value) on the original payment schedule. Your lender must cancel it automatically at 78% loan-to-value under the Homeowners Protection Act. Or, if your home has appreciated, order a new appraisal to show 20% equity sooner.

You can ask to cancel PMI in writing once you hit 20% equity, if you are current and have a good payment history. Automatic termination happens on its own at 78% loan-to-value, no request needed. Both are based on the original amortization schedule unless a new appraisal is used.

No. FHA loans carry a mortgage insurance premium (MIP) that, with less than 10% down, lasts the life of the loan. The usual way off FHA MIP is to refinance into a conventional loan once you have 20% equity.

Yes. Lender-paid MI built into a slightly higher rate, a piggyback second loan, or a no-MI program. Our 40-year program, for example, carries no mortgage insurance at any down payment.

It has been deductible in some years and not others, depending on whether Congress extends the provision and on your income. Check current IRS rules or a tax advisor for the year you are filing.

Your loan officer

Brett Hickman

Home First Financial

Brett Hickman

Mortgage Loan Originator · NMLS #2010859

+19493508005

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