Mortgage Education · 2026 Guide
Private Mortgage Insurance (PMI): What It Costs and How to Remove It
If you bought a home with less than 20% down, you're probably paying PMI every month. Here's what it actually costs, when it has to stop, and how to get rid of it sooner.
Typically 0.3%–1.5% of your loan each year
The Basics
What PMI actually is
When you put down less than 20% on a conventional loan, the lender's exposure to loss is higher. PMI is a policy the lender buys to reduce that risk, and the premium is passed to you. It's not a tax, not a fee the lender keeps, and not protection for you or your family if something happens.
Four things borrowers usually want to know:
It's usually built into your payment
Most borrowers see PMI as a line on their monthly statement — collected in escrow alongside taxes and homeowner's insurance. Some programs let you pay it upfront or in a single premium instead.
Different loans, different labels
Conventional loans use PMI. FHA loans use a mortgage insurance premium (MIP), and VA loans use a VA funding fee. The rules for when each ends are different, so confirm which one applies to your loan.
It is not the same as homeowner's insurance
Your homeowner's policy covers your home. PMI covers the lender's loss. Cancelling PMI does not change or affect your homeowner's insurance in any way.
It can be required by your lender — not banned by law
Nothing in the law says a lender must require PMI. It is a lending decision tied to loan-to-value. Lenders set it under their own guidelines, and federal rules govern when it must be disclosed and when it must end.
The Short Answer
What is PMI, in one paragraph
Private mortgage insurance (PMI) is insurance a conventional lender typically requires when your down payment is under 20% of the home's purchase price. It protects the lender — not you — if the loan goes into default. You pay for it, usually as part of your monthly payment.
Most borrowers pay roughly 0.3% to 1.5% of the loan amount per year, depending on credit score, down payment and loan type. On a $400,000 loan, that's typically somewhere between about $100 and $500 a month. PMI usually ends automatically once your loan balance falls to 78% of the original home value, and you can often request cancellation sooner at 80%.
Who pays it
Borrowers with less than 20% down on conventional loans
Typical cost
About 0.3%–1.5% of the loan amount per year
When it ends
Automatically at 78% LTV on the original value
Who it protects
The lender — never the borrower
The Numbers
What PMI costs
There is no single PMI rate. Insurers price it on your credit score, down payment, loan amount, property type and whether the loan is fixed or adjustable. The typical range is about 0.3% to 1.5% of the original loan amount per year — higher when the down payment is smaller or credit is thinner.
| Down payment | Typical annual PMI rate | Est. monthly PMI on $400k loan |
|---|---|---|
| 5% down | ≈ 0.60%–1.10% of loan | ≈ $200–$367 |
| 10% down | ≈ 0.45%–0.90% of loan | ≈ $150–$300 |
| 15% down | ≈ 0.30%–0.70% of loan | ≈ $100–$233 |
Illustrative only — not a quote. Your actual PMI rate and payment are set by your lender and insurer based on your full application. Estimates use a $400,000 loan with a 720 credit score.
Credit score carries weight
A higher score can mean a lower PMI rate. If your score is close to a pricing tier, a few points can matter.
Down payment sets the band
Going from 5% to 10% or 15% down usually lowers the rate — even before you reach the 20% line.
Some loans skip PMI
VA loans typically don't use PMI, and lenders may offer conventional programs with no PMI at other loan-to-values.
Calculator
Estimate your PMI
A quick way to see what PMI might add to your monthly payment. This is a rough estimate, not a quote.
Move the sliders to estimate. Your lender's actual PMI rate depends on your credit score, down payment and loan type.
Estimated monthly PMI
$200
Per year
$2,400
Over 5 years (estimate)
$12,000
Removing PMI
How to remove PMI
For conventional loans, federal rules lay out two milestones: you can request cancellation at 80% loan-to-value, and PMI must end automatically at 78%. Here's how the timeline works and the four practical ways borrowers get rid of it.
You can ask
Once your loan balance reaches 80% of the home's original value (based on the payment schedule), you can request cancellation in writing. The lender must agree certain conditions are met — such as a good payment history.
It ends automatically
Under federal rules, PMI on a conventional loan must end automatically once your balance reaches 78% of the original value on the amortization schedule — as long as your payments are current.
Term midpoint
If you're still paying PMI at the midpoint of the loan term (for example, 15 years into a 30-year loan), the servicer must terminate it — regardless of loan-to-value — if you're current on payments.
It never hangs on forever
Federal law requires PMI to end at some point even if the loan-to-value hasn't reached the threshold. If you're unsure where your loan stands, request a written status from your servicer.
Request cancellation
Write to your servicer asking to cancel PMI. Include your loan number and the reason you believe you qualify. They must respond in writing — including if they decline and why.
Get a new appraisal
If your home's value has gone up since you bought it, a new appraisal can lower your loan-to-value below 80% on the current value. Many lenders accept a borrower-requested appraisal for early cancellation — you usually pay for it.
Pay down the balance
Every extra dollar of principal moves the 78% and 80% milestones closer. Even a modest lump sum or a higher monthly principal payment can shave PMI off a few months or years sooner.
Refinance
A refinance into a new conventional loan at 80% LTV or less removes PMI with the old loan. Run the numbers on rate, term and closing costs against the PMI savings before deciding.
Not sure where your loan stands?
Compare your options with a licensed loan officer.
FAQ
Frequently asked questions about PMI
Written by
Saman Khanian
Equitable Lending
This guide was written by Saman Khanian and reviewed for compliance with current Equitable Lending lending guidelines. It is educational only and is not a loan offer, rate quote or commitment to lend.
Equitable Lending is a mortgage lender with NMLS 1124483 and DRE 01941713. Mortgage insurance requirements and cancellation rules can change; confirm current terms with your lender and servicer. Figures in this guide are illustrative only.
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