What Is PMI and How Do You Get Rid of It?
PMI lets you buy with less than 20% down. It protects the lender, not you — so the goal is to pay it only as long as you must.
What PMI is
Private mortgage insurance is a policy that pays the lender part of its loss if a borrower defaults. Lenders generally require it on conventional loans when the down payment is less than 20% of the home’s value — in other words, when the loan-to-value ratio (LTV) is above 80%. You pay the premium; the lender is the beneficiary.
PMI is specific to conventional loans. FHA loans have their own mortgage insurance premium (MIP) set by HUD, and VA loans have a funding fee instead.
How much PMI costs
Freddie Mac estimates that borrowers typically pay between $30 and $70 a month for every $100,000 borrowed. Expressed as an annual rate, that is about 0.36% to 0.84% of the loan. Where you fall in that range depends mostly on:
- Down payment — the smaller it is, the higher the premium.
- Credit score — higher scores get lower rates.
- Loan type and term, and whether the premium is paid monthly, upfront or built into a higher interest rate (lender-paid PMI).
Your exact PMI is shown on your Loan Estimate. For planning, the table below applies Freddie Mac’s range to a $350,000 home, and shows when a 30-year loan at 6.5% reaches the cancellation thresholds with no extra payments.
| Down payment | Loan | Freddie Mac range / month | Can request removal | Ends automatically |
|---|---|---|---|---|
| 3% | $339,500 | $101.85 – $237.65 | 11 years 1 month | 12 years |
| 5% | $332,500 | $99.75 – $232.75 | 10 years 4 months | 11 years 3 months |
| 10% | $315,000 | $94.50 – $220.50 | 7 years 11 months | 9 years 1 month |
| 15% | $297,500 | $89.25 – $208.25 | 4 years 8 months | 6 years 3 months |
The rules for removing PMI
The Homeowners Protection Act of 1998 sets the rules for most conventional loans on a primary residence. They are measured against the home’s original value — generally the lower of the purchase price and the appraisal at purchase:
- Borrower-requested cancellation at 80%. You can ask your servicer to cancel PMI once your principal balance is scheduled to reach 80% of the original value — or earlier, if extra payments get you there. You generally need a good payment history, no second liens, and may need to show the home hasn’t lost value.
- Automatic termination at 78%. The servicer must end PMI on the date the balance is scheduled to reach 78% of the original value, as long as you are current.
- Final termination at the midpoint. If PMI is still in place at the midpoint of the loan’s amortization schedule (15 years into a 30-year loan), it must end the following month, provided you are current.
The CFPB’s guidance notes that the first date you can request cancellation should be on the PMI disclosure you received at closing.
Getting rid of PMI sooner
- Pay extra principal. Every dollar of extra principal brings the 80% date closer. The PMI calculator shows the new date as you add an extra monthly amount.
- Ask about a new appraisal. If your home’s value has risen, many servicers will consider cancellation based on current value. That is a servicer policy, not a right under the HPA, and usually has extra conditions.
- Refinance. If rates and your equity allow, refinancing into a loan at or below 80% LTV removes PMI — but weigh closing costs with the refinance calculator.
Is paying PMI ever a good idea?
Often, yes. Waiting years to save 20% can cost more than PMI if rents are high or prices rise while you save. A $350,000 purchase with 10% down instead of 20% means a $35,000 smaller down payment in exchange for PMI of roughly $94.50–$220.50 a month by Freddie Mac’s range, for a limited number of years. Use the rent vs buy calculator to compare buying sooner with PMI against renting while you save.
Sources
- Freddie Mac, “Breaking down PMI,” My Home by Freddie Mac (accessed September 2026)
- Consumer Financial Protection Bureau, “When can I remove private mortgage insurance (PMI) from my loan?”
- Homeowners Protection Act of 1998, Public Law 105-216