PMI Explained: What Private Mortgage Insurance Really Costs — and How to Get Rid of It
By Jesse Garlick | July 10, 2026
Put less than 20% down on a conventional loan and you'll almost certainly pay private mortgage insurance — PMI. Here's the part that surprises people: PMI doesn't protect you. It protects your lender if you stop paying. You're buying insurance for someone else, stacked on top of your mortgage.
That's not a reason to avoid it at all costs. But you should know exactly what it costs — and exactly how to stop paying it the moment you're allowed to.
What PMI actually costs
PMI typically runs 0.3% to 1.5% of your loan amount per year, added to your monthly payment. Where you land depends mostly on your credit score and how little you put down: a lower score and a smaller down payment mean a higher rate.
| Example | Amount |
|---|---|
| Home price | $400,000 |
| Down payment (5%) | $20,000 |
| Loan amount | $380,000 |
| PMI at 0.5% per year | $1,900 / year |
| Added to your monthly payment | ≈ $158 / month |
That's roughly $9,500 over five years in this example — real money, and exactly why getting rid of it matters.
How to get rid of PMI — the law is on your side
On a conventional loan for your primary residence, the federal Homeowners Protection Act gives you specific rights:
- You can request cancellation at 80% LTV. Once your balance drops to 80% of the home's original value, you can ask your servicer in writing to cancel. You'll generally need to be current on payments with a good payment history.
- It must cancel automatically at 78% LTV. When your balance reaches 78% of the original value, your servicer is required to terminate PMI on its own — as long as you're current.
- Backstop: the midpoint of your loan. If you're current on payments, PMI must end by the halfway point of your amortization schedule (year 15 of a 30-year loan), even if you haven't hit 78%.
The move most people miss: your home went up in value
If your home appreciated, you may hit 80% LTV far sooner than your amortization schedule suggests. Many lenders will cancel PMI based on a new appraisal showing the higher value — but that's a servicer and investor policy, not a federal right, and requirements (like how long you've held the loan) vary. Call your servicer and ask exactly what they require. On a home that's jumped in value, this one phone call can save you a year or more of premiums.
FHA loans are a completely different animal
This trips up a lot of first-time buyers. FHA loans don't have PMI — they have MIP (mortgage insurance premium), and the rules are far less forgiving:
- An upfront premium (currently 1.75% of the loan), usually rolled into the loan, plus an annual premium.
- Put down less than 10%, and MIP generally lasts the entire life of the loan. It does not fall off at 80%.
- Put down 10% or more, and MIP generally drops off after 11 years.
The usual escape from lifetime MIP is to refinance into a conventional loan once you have enough equity — worth doing only if the rate math works. If you're using down payment assistance (see our guide to Florida first-time home buyer programs), check whether it attaches to an FHA or a conventional first mortgage. That single choice decides whether your mortgage insurance ever goes away.
An honest word: PMI isn't always the enemy
The instinct to wait and save a full 20% is understandable — but it isn't automatically right. If home prices in your area are climbing faster than you can save, waiting three years to avoid $158 a month can cost you far more in purchase price and lost equity. Sometimes buying now with PMI, then canceling it in a few years, is the cheaper path. Run both numbers before you assume waiting wins.
What to do next
Check your current loan balance against your home's original purchase price — that ratio tells you how close you are to 80%. Then run the numbers with our mortgage calculator, or get pre-qualified to see what your payment (and mortgage insurance) would actually look like. More questions? Our FAQ covers the ones we hear most.
Premiums and rules change, so confirm current details with your servicer or the official sources below before making a decision.
Sources
- CFPB — What is private mortgage insurance?
- CFPB — When can I remove PMI from my loan?
- HUD — FHA loans and mortgage insurance
Keep reading: How Florida's insurance crisis shrinks mortgage approvals · Get pre-qualified free