How much does PMI cost?

PMI typically costs $30 to $70 per month for every $100,000 borrowed. On a $400,000 loan with 5% down, expect around $365/month. With 10% down, around $234/month. With 15% down, around $95/month.

Who does PMI protect?

PMI protects the lender, not the borrower. If you default, the insurance company pays the lender for their loss. You can still lose your home to foreclosure and damage your credit. You still need separate homeowners insurance to protect yourself.

PMI reduces the lender's risk when you have less than 20% equity. Without PMI, lenders would either deny these loans or charge much higher interest rates. PMI enables millions of buyers to purchase homes with smaller down payments.

When can I remove PMI from my loan?

Under the Homeowners Protection Act (HPA), you can request PMI cancellation when you reach 80% loan-to-value (20% equity). PMI must be automatically terminated when you reach 78% LTV based on your original amortization schedule.

How do I request PMI cancellation?

Send a written request to your loan servicer when your balance reaches 80% of your home's original value. You must be current on payments, have a good payment history, certify no junior liens, and may need an appraisal proving value hasn't declined.

What if I pay extra toward my mortgage?

Extra payments can help you reach 20% equity faster. You can request cancellation when your actual balance reaches 80% LTV, even if your original schedule shows a later date. The lender may require an appraisal.

Can lender-paid PMI (LPMI) be removed?

No. LPMI cannot be removed because it's built into your interest rate. The only way to eliminate it is to refinance into a new loan. This is a major drawback of LPMI despite the lower monthly payment.

What's the difference between PMI and FHA MIP?

PMI is for conventional loans and can be removed at 20% equity. FHA MIP has an upfront fee (1.75%) plus monthly premiums that typically last the life of the loan if you put down less than 10%. MIP is often more expensive long-term.

Is PMI or MIP cheaper?

It depends on your credit score and down payment. Borrowers with credit scores above 680 often find conventional PMI cheaper. Those with lower scores may find FHA MIP more affordable initially, but the lifetime cost can be higher.

Can I switch from FHA to conventional to remove MIP?

Yes! Many homeowners refinance from FHA to conventional once they have 20% equity. This eliminates the permanent MIP and can save thousands over the life of the loan.

How can I avoid paying PMI?

Put 20% or more down on a conventional loan. You can also consider VA loans (no PMI for veterans) or USDA loans (different fee structure). Some lenders offer "piggyback" loans (80-10-10) that avoid PMI through a second mortgage.

What is an 80-10-10 loan?

Also called a "piggyback" loan: an 80% first mortgage, 10% second mortgage (HELOC), and 10% down payment. This avoids PMI because the first mortgage is only 80% LTV. However, the second mortgage has a higher rate.

Should I wait to save 20% down?

Not necessarily. In appreciating markets, the wealth you build from home equity can outweigh PMI costs. Run the numbers: if PMI costs $200/month but home values are rising $500/month, buying sooner may be smarter.

How much does PMI cost?

PMI typically costs $30 to $70 per month for every $100,000 borrowed. On a $400,000 loan with 5% down, expect around $365/month. With 10% down, around $234/month. With 15% down, around $95/month.

Who does PMI protect?

PMI protects the lender, not the borrower. If you default, the insurance company pays the lender for their loss. You can still lose your home to foreclosure and damage your credit. You still need separate homeowners insurance to protect yourself.

PMI reduces the lender's risk when you have less than 20% equity. Without PMI, lenders would either deny these loans or charge much higher interest rates. PMI enables millions of buyers to purchase homes with smaller down payments.

When can I remove PMI from my loan?

Under the Homeowners Protection Act (HPA), you can request PMI cancellation when you reach 80% loan-to-value (20% equity). PMI must be automatically terminated when you reach 78% LTV based on your original amortization schedule.

How do I request PMI cancellation?

Send a written request to your loan servicer when your balance reaches 80% of your home's original value. You must be current on payments, have a good payment history, certify no junior liens, and may need an appraisal proving value hasn't declined.

What if I pay extra toward my mortgage?

Extra payments can help you reach 20% equity faster. You can request cancellation when your actual balance reaches 80% LTV, even if your original schedule shows a later date. The lender may require an appraisal.

Can lender-paid PMI (LPMI) be removed?

No. LPMI cannot be removed because it's built into your interest rate. The only way to eliminate it is to refinance into a new loan. This is a major drawback of LPMI despite the lower monthly payment.

What's the difference between PMI and FHA MIP?

PMI is for conventional loans and can be removed at 20% equity. FHA MIP has an upfront fee (1.75%) plus monthly premiums that typically last the life of the loan if you put down less than 10%. MIP is often more expensive long-term.

Is PMI or MIP cheaper?

It depends on your credit score and down payment. Borrowers with credit scores above 680 often find conventional PMI cheaper. Those with lower scores may find FHA MIP more affordable initially, but the lifetime cost can be higher.

Can I switch from FHA to conventional to remove MIP?

Yes! Many homeowners refinance from FHA to conventional once they have 20% equity. This eliminates the permanent MIP and can save thousands over the life of the loan.

How can I avoid paying PMI?

Put 20% or more down on a conventional loan. You can also consider VA loans (no PMI for veterans) or USDA loans (different fee structure). Some lenders offer "piggyback" loans (80-10-10) that avoid PMI through a second mortgage.

What is an 80-10-10 loan?

Also called a "piggyback" loan: an 80% first mortgage, 10% second mortgage (HELOC), and 10% down payment. This avoids PMI because the first mortgage is only 80% LTV. However, the second mortgage has a higher rate.

Should I wait to save 20% down?

Not necessarily. In appreciating markets, the wealth you build from home equity can outweigh PMI costs. Run the numbers: if PMI costs $200/month but home values are rising $500/month, buying sooner may be smarter.

Mortgage Education

What IsPrivate Mortgage Insurance?

Q: What is private mortgage insurance (PMI)?

PMI is insurance that protects your lender—not you—if you stop making mortgage payments. It's required on conventional loans when you put down less than 20%. PMI does not prevent foreclosure or protect your credit if you default.

PMI protects your lender—not you—when you put less than 20% down. Learn what it costs, the 5 types, and how to remove it once you build equity.

Calculate My PMI Call (602) 753-9600

$30-$70

per month, per $100K borrowed

20%

equity to remove PMI

78%

LTV = automatic termination

1998

Homeowners Protection Act

Important Distinction

PMI Protects the Lender, Not You

This is the most misunderstood aspect of mortgage insurance. You pay for it, but it doesn't protect you.

What PMI Does

Reimburses the lender if you default on your mortgage
Allows lenders to offer loans with less than 20% down
Enables millions of buyers to purchase homes sooner
Can be removed once you reach 20% equity (conventional loans)

What PMI Does NOT Do

Protect you from foreclosure if you can't make payments
Cover your home against damage (that's homeowners insurance)
Protect your credit score if you default
Pay you anything—ever—under any circumstances

Read the CFPB's official PMI guide

Watch & Learn

PMI Explained in Video

Visual explanations from Freddie Mac, USDA, and trusted educators.

Now Playing

Private Mortgage Insurance (PMI)

Official Freddie Mac explainer on PMI basics, costs, and removal at 20% equity.

Freddie Mac2 min

We only feature videos from government agencies and established financial educators.

Video Playlist

4 educational videos

All videos from official or educational sources

$30-$70 per $100K

Typical monthly PMI cost. A $300,000 loan might add $90-$210/month to your payment.

20% Equity = Freedom

PMI can be removed once you reach 20% equity. FHA MIP often lasts the life of the loan.

Protects the Lender

PMI does NOT protect you. It protects the lender if you default. You still need homeowners insurance.

Interactive Calculator

How Much Will PMI Cost You?

Adjust your home price and down payment to see estimated PMI costs.

Home Price

$100K$1M

Down Payment

3%20% (No PMI)25%

Down payment: $40,000

Monthly PMI

$156

added to payment

Annual PMI

$1,872

per year

Est. Time to 20%

6.3

years (approx)

Total PMI Cost

$11,700

until removal

PMI rates vary by credit score, loan type, and lender. This is an estimate based on typical rates.

Know Your Options

4 Types of Private Mortgage Insurance

Not all PMI is created equal. Here's how to choose the right type for your situation.

Borrower-Paid (BPMI)

Most common. Added to your monthly mortgage payment.

Pros

• Can be cancelled at 20% equity
• No large upfront cost
• Flexible

Cons

• Increases monthly payment
• Paid until 20% equity reached

Best for: Most borrowers who plan to stay in the home

Single-Premium

One lump sum paid at closing. No monthly payments.

Pros

• Lower monthly payment
• Good if you have extra cash

Cons

• Large upfront cost
• Not refundable if you move or refinance

Best for: Borrowers with extra cash who plan to stay long-term

Lender-Paid (LPMI)

Lender pays PMI but charges you a higher interest rate.

Pros

• No separate PMI payment
• Lower closing costs

Cons

• Cannot be removed—ever
• Higher rate for life of loan

Best for: Borrowers who want lower monthly payment and may refinance soon

Split-Premium

Combination of upfront payment + lower monthly payments.

Pros

• Flexibility
• Lower monthly than BPMI

Cons

• Some upfront cost
• More complex

Best for: Borrowers who want balance between upfront and monthly costs

Learn more about PMI types at Investopedia

Comparison Chart

PMI vs MIP vs VA Fee vs USDA Fee

Different loans have different mortgage insurance structures. Here's how they compare.

Loan Type	Insurance Name	Upfront Cost	Monthly Cost	Removal Rules
Conventional	PMI	None (usually)	0.3%–1.5% annually	At 20% equity (request) or 22% (automatic)
FHA	MIP	1.75% of loan amount	0.15%–0.75% annually	Life of loan (if <10% down) or 11 years
VA	Funding Fee	1.25%–3.3% (one-time)	None	N/A (no monthly insurance)
USDA	Guarantee Fee	1% of loan amount	0.35% annually	Life of loan

Key Insight: FHA MIP Can Cost More Long-Term

While FHA loans have lower credit requirements, the MIP often lasts the life of the loan if you put down less than 10%. Many borrowers refinance to conventional once they reach 20% equity to eliminate this permanent cost.

Your Legal Rights

How to Remove PMI (It's the Law)

The Homeowners Protection Act of 1998 gives you the right to cancel PMI. Here are your three paths to freedom.

80%

Request Cancellation

When your loan balance reaches 80% of your home's original value, you can request PMI cancellation in writing.

Must be current on payments
Good payment history required
May need appraisal

78%

Automatic Termination

Lenders must automatically terminate PMI when your balance is scheduled to reach 78% of original value.

No request needed
Must be current on payments
Happens automatically

Final Termination

PMI must be terminated at the midpoint of your loan (e.g., 15 years on a 30-year mortgage), regardless of LTV.

Backstop protection
Even if LTV still above 78%
Must be current

Read the CFPB's PMI removal guide

Frequently Asked Questions

Your PMI Questions, Answered

Real questions about private mortgage insurance, answered thoroughly.

PMI Basics

Removing PMI

FHA vs Conventional

Avoiding PMI

Ready to Buy with Confidence?

Now that you understand PMI, let's find the right loan for your situation. We'll help you compare options and minimize your total cost—whether that's PMI, MIP, or no mortgage insurance at all.

Free consultation. No obligation. Real answers from licensed mortgage experts.

Get Pre-Qualified Now Call (602) 753-9600

Licensed Lender

NMLS# Licensed

Equal Housing Lender

Serving Arizona

Official resources: CFPB PMI Guide|PMI Removal|Homeowners Protection Act

What IsPrivate Mortgage Insurance?

PMI Protects the Lender, Not You

What PMI Does

What PMI Does NOT Do

PMI Explained in Video

Private Mortgage Insurance (PMI)

Video Playlist

Private Mortgage Insurance (PMI)

FHA Mortgage Insurance: What You Need to Know

What Is PMI And Why Do I Pay It?

USDA Single Family Housing Guaranteed Loan Program

$30-$70 per $100K

20% Equity = Freedom

Protects the Lender

How Much Will PMI Cost You?

4 Types of Private Mortgage Insurance

Borrower-Paid (BPMI)

Single-Premium

Lender-Paid (LPMI)

Split-Premium

PMI vs MIP vs VA Fee vs USDA Fee

Key Insight: FHA MIP Can Cost More Long-Term

How to Remove PMI (It's the Law)

Request Cancellation

Automatic Termination

Final Termination

Your PMI Questions, Answered

PMI Basics