PMI explained: what it costs and how to get rid of it faster
Private mortgage insurance costs about 0.3%–1.5% of the loan a year when you put under 20% down. How PMI is priced, when it must end, FHA MIP rules and five ways to remove it sooner.
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Quick answer: Private mortgage insurance (PMI) protects the lender — not you — if you default on a conventional loan with less than 20% down. It usually costs about 0.3% to 1.5% of the loan amount a year, added to your monthly payment. You can ask to cancel it once your balance reaches 80% of the home's original value, and it must end automatically at 78% if you are current on payments.
Key takeaways
- On a $320,000 loan, PMI at 0.6% is about $160 a month.
- Your credit score and down payment set the rate; a 760+ score can cost half as much as a 660 score.
- FHA loans have their own insurance (MIP) that often lasts for the life of the loan if you put less than 10% down.
- A new appraisal after a value rise, or extra principal payments, can remove PMI years early.
How PMI is priced
Lenders price PMI with a grid based on your loan-to-value ratio (LTV) and credit score. Less money down and a lower score mean a higher rate. Debt-to-income ratio, whether you are a first-time buyer, and the property type can also matter.
| Down payment | Typical annual PMI range | Monthly PMI on a $320,000 loan |
|---|---|---|
| 15% | ~0.2%–0.6% | ~$55–$160 |
| 10% | ~0.3%–0.9% | ~$80–$240 |
| 5% | ~0.4%–1.3% | ~$105–$345 |
| 3% | ~0.5%–1.5% | ~$135–$400 |
These are broad ranges for illustration — get the exact figure from your Loan Estimate. Try different down payments in our mortgage calculator to see the full monthly cost including PMI.
Types of PMI
- Borrower-paid monthly PMI — the most common; added to your monthly payment and removable later.
- Single-premium PMI — paid upfront at closing; no monthly charge, but usually not refundable if you sell or refinance early.
- Lender-paid PMI — the lender covers it in exchange for a higher interest rate, which you keep for the life of the loan unless you refinance.
- Split-premium — part upfront, part monthly.
When PMI goes away (the law)
Under the federal Homeowners Protection Act, for most conventional loans on a primary home:
- You may request cancellation when your balance is scheduled to reach, or you pay it down to, 80% of the original value. You need a good payment history and may need to show the home hasn't lost value.
- The lender must end it automatically when your balance is scheduled to hit 78% of the original value, as long as you are current.
- It must end at the midpoint of the loan term (year 15 of a 30-year loan) even if you haven't reached 78%.
"Original value" means the lower of the purchase price or the appraised value at closing.
FHA mortgage insurance is different
FHA loans charge an upfront MIP of 1.75% of the loan (usually rolled into the loan) plus an annual MIP, which for most borrowers is 0.55%. If you put less than 10% down, annual MIP lasts for the life of the loan; with 10% or more down, it lasts 11 years. The usual way out is refinancing into a conventional loan once you have 20% equity.
Five ways to get rid of PMI sooner
- Pay extra principal. Even $100–$200 a month can bring the 80% date forward by years.
- Ask for cancellation at 80% — don't wait for the automatic 78%.
- Order a new appraisal if your home has risen in value. Many lenders allow removal at 75% LTV after two years or 80% after five years, based on current value.
- Remodel smartly. Improvements that add value — see kitchen remodel cost — can support a higher appraisal.
- Refinance when rates are favorable and you have 20% equity on the new appraisal.
Warning: Don't drain your emergency savings to reach 20% down. A few years of PMI is usually cheaper than having no cushion when the roof or water heater fails.
Is PMI ever worth it?
Often, yes. Waiting years to save 20% can cost more than PMI if home prices and rents keep rising. PMI is a cost of buying sooner, not a penalty — just plan to remove it as early as you can. A strong credit score is the cheapest way to keep it low.
Frequently asked questions
How much is PMI per month?
Roughly $30–$125 a month for every $100,000 borrowed, depending on your credit score and down payment.
Is PMI tax-deductible?
The federal deduction for mortgage insurance premiums expired after 2021. The 2025 tax law (One Big Beautiful Bill Act) restores it for itemizers starting in tax year 2026, subject to income limits — check IRS guidance for your year.
Does PMI go away when my home value goes up?
Not automatically. Automatic cancellation is based on your original value and payment schedule. To use a higher current value, you must ask your servicer and usually pay for a new appraisal.
Can I avoid PMI without 20% down?
Options include VA loans (no monthly mortgage insurance), lender-paid PMI, or a "piggyback" second loan. Each has trade-offs in rate and fees.