Key Takeaways
- PMI is usually required on conventional loans with less than 20% down.
- It typically costs about 0.3%–1.5% of the loan per year.
- Conventional PMI cancels at 20% equity; FHA mortgage insurance usually doesn’t.
- 20% down, a piggyback structure, or a VA loan can avoid it.
PMI is one of the most misunderstood parts of a mortgage. Here’s what it is, what it costs, and how to make it go away.
What is PMI?
Private mortgage insurance protects the lender when you put less than 20% down on a conventional loan. It’s added to your monthly payment and does not protect you — it protects the lender.
How much does PMI cost?
Roughly 0.3%–1.5% of the loan amount per year, depending on your down payment and credit score. On a $300,000 loan that can be about $75–$375 per month.
How do you get rid of PMI?
On conventional loans, PMI cancels automatically at 78% loan-to-value and can be requested at 80%. FHA mortgage insurance typically lasts the life of the loan — a key reason to compare FHA vs. conventional, or consider a VA loan with no monthly mortgage insurance at all.
Frequently Asked Questions
How do I avoid PMI?
Put 20% down, use a piggyback second loan, or choose a loan without monthly mortgage insurance, such as a VA loan.
Does FHA have PMI?
FHA has mortgage insurance premiums (MIP) that usually last the life of the loan, unlike conventional PMI, which cancels at 20% equity.
When does PMI go away?
On conventional loans, automatically at 78% loan-to-value, or by request at 80%.
Related resources
Working through this in Colorado? I’m David Silva, a mortgage loan officer based in Westminster, CO (NMLS 1352284), licensed in Colorado, California, Georgia and Texas. Take a look at every loan program I offer or first-time buyer help — or send me your scenario and I’ll tell you straight whether it works.
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