PMI - private mortgage insurance - is a monthly charge added to your mortgage payment when you put less than 20% down on a conventional loan. Expect roughly $30 to $70 a month for every $100,000 borrowed, per Freddie Mac. On a $350,000 loan, that is about $105 to $245 a month.
Here is the part that surprises people: the insurance protects your lender, not you. If you stop paying and the lender loses money, PMI covers their loss. You pay the premium; they get the protection.
That sounds like a raw deal, and in isolation it is. But PMI is also the price of buying years earlier than a 20% down payment would allow - and unlike most housing costs, it is designed to end. Federal law gives you specific rights to cancel it. This guide covers what you will pay, exactly when it goes away, and how to speed that up.
When PMI applies
The trigger is simple: a conventional loan (one not backed by a government program) with less than 20% down. Lenders require PMI because a small down payment gives you less skin in the game, which makes the loan riskier for them.
Two clarifications worth having straight:
- PMI is not a reason to avoid a small down payment. Conventional loans allow as little as 3% down, and buying sooner often beats renting for years to save 20%. It is simply a cost to budget for - how much house can I afford shows where it fits in the bigger math.
- FHA loans have their own version, with different rules. FHA mortgage insurance (called MIP) works differently and, unlike PMI, does not automatically end at the same equity milestones. The removal rights below apply to conventional-loan PMI.
What PMI costs
Freddie Mac’s benchmark: approximately $30 to $70 per month for every $100,000 borrowed. Your exact rate depends mostly on three things - your credit score, your down payment size (less down means pricier PMI), and your loan amount.
| Loan amount | Typical PMI range per month |
|---|---|
| $200,000 | $60 - $140 |
| $300,000 | $90 - $210 |
| $350,000 | $105 - $245 |
| $450,000 | $135 - $315 |
A worked example ties it to a real payment. Buy a $400,000 home with 10% down ($40,000) and you borrow $360,000 - a 90% loan-to-value, so PMI applies. At 0.75% a year (a mid-range rate; the typical band runs about 0.46% to 1.5%), 0.75% of $360,000 is $2,700 a year, or $225 a month. Strong credit might land you nearer $138 (0.46%); a thinner file could push it toward $450 (1.5%). Freddie Mac’s “$30 to $70 per $100,000 borrowed” is the same cost in dollars - about 0.36% to 0.84% a year - so real quotes cluster around these figures. Our mortgage calculator uses the percentage, so you can match the exact rate your lender quotes and watch the line item change.
Most borrowers pay PMI as a line inside the monthly payment, which is where it hides in plain sight: it sits in the same bundle as taxes and insurance, so plenty of homeowners pay it for years without noticing. PITI explained shows the full anatomy of that bundle.
A tax note for 2026: the deduction for mortgage insurance premiums is back. It had expired after 2021, but starting with the 2026 tax year, premiums can again count as an itemized deduction - the IRS’s draft 2026 Schedule A restores a dedicated line for them. You must itemize rather than take the standard deduction, and income limits apply, so check current IRS guidance when you file.
Your legal rights: when PMI must end
The federal Homeowners Protection Act sets two automatic off-switches and one you can pull early. All three are based on your home’s original value (the purchase price or original appraisal), and all require you to be current on payments. Per the CFPB:
| Milestone | What happens | What it takes |
|---|---|---|
| Loan balance hits 80% of original value | You can request cancellation | A written request, a good payment history, being current, no other liens on the home, and evidence the value has not fallen |
| Loan balance scheduled to hit 78% of original value | Servicer must terminate PMI automatically | Nothing from you - just stay current on payments |
| Midpoint of the loan term (year 15 of a 30-year) | Servicer must end PMI even if you are not at 78% | Being current on payments |
The two percentages are easy to mix up, so anchor the difference: at 80% you have the right to ask; at 78% they must act without being asked. On a typical schedule the gap between those two points can be a year or more of premiums - which is why the written request at 80% is worth sending the month you qualify, not whenever you remember.
Mark the date now. Your loan’s amortization schedule (the month-by-month payoff table your servicer can give you) shows exactly when the balance is scheduled to cross 80% and 78%. Put the 80% month in your calendar.
How to get rid of PMI sooner
Waiting for the schedule works, but four things move the date up:
- Pay extra principal. The 80% and 78% triggers track your loan balance, so every extra dollar of principal drags the cancellation date closer. Even $100 a month extra moves it meaningfully on a typical loan.
- Let appreciation do the work. If your home’s market value has risen since you bought, your equity may have crossed 20% of current value even though your balance has not hit 80% of original value. Many servicers will consider cancellation based on a new appraisal - typically with minimum seasoning (a couple of years of ownership) and at your expense for the appraisal. Rules vary by servicer and loan, so call yours and ask exactly what they need.
- Remodel, then reappraise. Significant improvements that raise the home’s value can support the same request.
- Refinance out of it. If a new loan is 80% or less of the home’s current value, the new loan has no PMI. This only pencils out when the refinance rate is attractive on its own - do not trade a great rate for a PMI escape; run the total cost both ways first.
Avoiding PMI from the start
If you are still shopping, you have three routes, each with real tradeoffs:
- Put 20% down. Clean, but slow - and years of waiting can cost more in rising prices and rent than PMI would have.
- Lender-paid PMI. The lender covers the premium in exchange for a higher rate. The catch: PMI eventually cancels, but the higher rate lasts the life of the loan. It rarely wins for buyers who plan to stay put.
- Piggyback loans. A second, smaller loan covers part of the down payment so the first loan stays at 80%. Two loans mean two rates and more fees at closing - compare the all-in monthly cost, not just the missing PMI line. And remember closing costs run 2% to 5% of the price regardless - closing costs explained itemizes what you will pay either way.
For most buyers with solid credit, plain PMI plus a plan to cancel it early is the cheapest honest path.
Common mistakes with PMI
- Waiting for automatic termination instead of requesting at 80%. This is the expensive one. Your servicer only has to cancel PMI automatically at 78% of the original value; you can request it at 80%, and the gap between those two points is often more than a year of premiums. On the $360,000 example above, the balance is scheduled to reach 80% around month 94 but 78% not until about month 108 - roughly 14 extra payments at $225, or about $3,150, for not sending one letter on time. Pull your amortization schedule, find the 80% month, and mail the written request when it arrives.
- Assuming “automatic” means “as soon as I have 20% equity.” The automatic rule tracks your scheduled loan balance against the home’s original value, not today’s market price. If your home has appreciated, you may already be past 20% equity while the schedule still shows PMI running - but that early exit only happens if you request it and pay for an appraisal.
- Confusing FHA MIP with conventional PMI. They are different products with different rules. The 80%/78% cancellation rights are for conventional-loan PMI under the Homeowners Protection Act; FHA’s mortgage insurance often lasts the life of the loan and usually ends only by refinancing into a conventional loan once you have the equity.
- Letting it hide in the payment. PMI sits in the same monthly bundle as taxes and insurance, so it is easy to keep paying long after you qualify to drop it. Once a year, check your current balance against 80% of what you paid for the home.
The bottom line
PMI costs roughly $30 to $70 a month per $100,000 borrowed, protects your lender, and - by federal law - must end: you can request cancellation at 80% of your home’s original value and your servicer must terminate it at 78%, as long as you are current. Send the written request the month you qualify, or earlier if appreciation has pushed your equity past 20%. To see what PMI does to a specific payment, run your numbers in the mortgage calculator with a sub-20% down payment and watch the line item.
FAQ
Does PMI protect me if I lose my job?
No. PMI protects the lender against loss if you default. If you want protection for your own income, that is separate disability or life insurance - PMI does nothing for you beyond making the loan possible with less down.
Is PMI wasted money?
It is a fee, not an investment - but it buys you the ability to own years sooner. If your alternative is renting while saving toward 20%, compare rent plus rising prices against PMI plus building equity. PMI often wins that comparison; it just should not be paid a month longer than necessary.
Can I cancel PMI based on my home’s higher value today?
Often, yes - servicers commonly consider a cancellation request supported by a new appraisal once you have owned the home for a while, subject to their equity and seasoning rules. This is servicer- and loan-specific, so call and ask for their exact requirements before paying for an appraisal.
Does FHA mortgage insurance cancel the same way?
No. FHA’s MIP follows different rules - the automatic-termination rights in this guide do not apply to FHA loans, and shedding MIP often means refinancing into a conventional loan once you have the equity. The 80%/78% rights here are for conventional-loan PMI under the Homeowners Protection Act.
Sources
- Freddie Mac My Home - PMI cost range ($30 to $70 per month per $100,000 borrowed)
- Consumer Financial Protection Bureau - Homeowners Protection Act cancellation and termination rules
- Freddie Mac My Home - down payments and PMI basics
- IRS draft 2026 Schedule A - mortgage insurance premiums line restored for tax year 2026
