What PMI Is and How Much It’s Costing You

Private mortgage insurance is what a lender tacks on when you take a conventional loan with less than 20% down (an LTV above 80%). The key thing to understand: it protects the lender, not you, if you stop paying. It is not homeowners insurance, and it does nothing to build your equity. It’s usually bundled right into your monthly mortgage payment, which is why a lot of people forget it’s even there — per Freddie Mac, expect roughly $30–$70 a month for every $100,000 borrowed.

The point of this article is getting rid of it, so let’s put a dollar figure on what you’re paying. According to Bankrate, PMI generally runs about 0.46% to 1.5% of your original loan amount per year. Here’s what that looks like in real monthly dollars:

These figures are illustrative — your actual rate depends on your credit score, down-payment size, loan amount, and loan type (adjustable-rate loans can cost more). The single biggest lever is credit: a higher score means a lower PMI rate, so if yours has room to grow, it’s worth reading how to fix your credit score fast before you shop. To see your own number, check the PMI disclosure you received at closing.

When Does PMI Go Away? The 3 Rules

This is the answer most people are looking for. Thanks to the federal Homeowners Protection Act of 1998, there are exactly three moments PMI can end — and the Consumer Financial Protection Bureau spells them out clearly.

First, you can request cancellation at 80% LTV. Once your balance is scheduled to reach 80% of your home’s original value, you have the right to ask your servicer, in writing, to cancel PMI. Second, your servicer must cancel it automatically at 78% LTV (that’s 22% equity) — no request required, as long as you’re current. Third, even if you never hit 78% because of slow amortization, PMI must end at the midpoint of your loan term — the little-known backstop that matters most for interest-only or balloon loans.

One term does a lot of work here: “original value.” That means your purchase price or the original appraised value, whichever is lower (or, if you’ve refinanced, the appraised value at the time of the refinance). Note too that these rights apply to conventional loans on principal residences that closed on or after July 29, 1999; FHA and VA loans follow different rules, which we cover below.

5 Ways to Remove PMI Early

The automatic rules are the floor, not the ceiling. If you’d rather not wait for the servicer to get around to it, here are five ways to end PMI faster — roughly in order from easiest to most involved. The recurring theme: your request must be in writing, and you have to be current with a clean recent payment history.

1. 1 Pay down to 80% and formally request it

   The moment your balance is scheduled to reach 80% of your home’s original value, send your servicer a written PMI cancellation request. This is the single fastest route for anyone already near the line.

   Best for: homeowners a payment or two away from 80%.

   The catch: you must be current with a good history, and your lender may ask you to certify there are no second liens (like a HELOC) on the home.

2. 2 Make extra principal payments

   Even an extra $50–$100 a month put toward principal shortens the road to 20% equity noticeably over a few years. Just confirm with your servicer that the extra is applied to principal — not prepaying next month’s bill.

   Best for: owners a couple of years out who can spare a little each month.

   The catch: it’s a slow build, and you still have to send the written request once you cross 80%.

3. 3 Get a new appraisal if your home appreciated

   A rising market or a solid renovation can push you to 20%+ equity years earlier than your amortization schedule would. A lender-approved appraisal showing the new value can qualify you for removal — and if you’d rather tap that equity than just cancel PMI, compare a HELOC vs. a home equity loan.

   Best for: owners in hot markets or those who’ve upgraded the home.

   The catch: many lenders require a “seasoning” period (often 2–5 years), you pay for the appraisal (~$300–$600), and if values slipped you may not qualify.

4. 4 Refinance into a loan with 20%+ equity

   A new loan at 80% LTV or lower carries no PMI at all. This works best when you were going to refinance anyway for a better rate or term. Run the math with our guide to when refinancing actually makes sense.

   Best for: owners who can also lock a meaningfully better rate.

   The catch: closing costs. Refinancing solely to shed PMI usually isn’t worth it unless the new terms justify the expense.

5. 5 Wait for automatic cancellation

   Do nothing, and your servicer must drop PMI at 78% LTV (or at the loan’s midpoint). It’s the hands-off option and it’s free.

   Best for: owners near the line who don’t want the paperwork.

   The catch: you keep paying right up to the scheduled date — requesting at 80% gets it off your bill sooner.

FHA Loans: Why “PMI” May Never Go Away

This is the number-one thing FHA borrowers get wrong, so let’s be blunt about it. FHA loans don’t have PMI — they have MIP (a mortgage insurance premium), which is paid to HUD and works very differently. The rules from HUD are strict.

For reference, FHA charges an upfront MIP of 1.75% of the loan, plus an annual MIP that runs about 0.55% for most borrowers. If you’re on an FHA loan and building equity, don’t wait for a cancellation that isn’t coming — plan the conventional refinance instead. And a quick note for two other loan types: VA loans have no PMI or MIP at all (a one-time funding fee applies instead), and USDA loans carry their own guarantee fee rather than PMI.

How to Avoid PMI in the First Place

If you’re still shopping, the cleanest way to skip PMI is the obvious one: put 20% down. Not everyone can, so here are the real alternatives — each with an honest tradeoff, because “no PMI” almost never means “no cost.”

• Lender-paid PMI (LPMI): the lender covers the premium in exchange for a higher interest rate. There’s no monthly PMI line item, but you can’t cancel it either — the higher rate rides along for the life of the loan unless you refinance. It can cost more over time.
• An 80/10/10 “piggyback” loan: a first mortgage at 80%, a second loan for 10%, and 10% down. It sidesteps PMI but adds a second loan (often at a higher rate). A bonus for pricier homes: it can keep your first mortgage under the jumbo loan threshold.
• A VA loan: if you’re an eligible veteran or service member, this is the strongest no-PMI route — see our guide to zero-down VA home loans.
• No-PMI lender programs: some lenders advertise them, but they typically bake the cost into a higher rate or fees. Read the fine print.

The honest bottom line: with the exception of a VA loan, “no PMI” usually means you’re paying for the risk somewhere else — most often in your rate. If you’re weighing the down-payment math, our first-time buyer home loan strategies break down the full picture.

Is PMI Tax-Deductible?

For a few years, no — the mortgage insurance deduction lapsed for tax years 2022 through 2025. But it’s back: under the One Big Beautiful Bill Act, PMI (along with FHA MIP, the VA funding fee, and USDA guarantee fees) on home acquisition debt is again treated as deductible mortgage interest starting with the 2026 tax year, reported on Schedule A if you itemize. The deduction phases out between $100,000 and $110,000 of adjusted gross income, so higher earners get little or none of it. Rules and thresholds can change, so confirm current law and see our full breakdown of the 2026 tax changes and new deductions.

Frequently Asked Questions

When does PMI automatically go away?

When your loan balance is scheduled to reach 78% of your home’s original value (22% equity) and you’re current on payments — or at the midpoint of your loan term, whichever comes first.

Can I remove PMI without refinancing?

Yes. You can request cancellation at 80% LTV, speed things up with extra principal payments, or use a new appraisal if your home has appreciated. Refinancing is just one of several routes, not the only one.

How much is PMI per month?

Typically about $115 to $375 on a $300,000 loan (roughly 0.46% to 1.5% of the loan per year), depending on your credit score, down payment, and loan type.

How do I request PMI removal, and who do I contact?

Contact your loan servicer (listed on your monthly statement) and make the request in writing. You’ll need to be current with a good payment history; the earliest eligible date should appear on the PMI disclosure you got at closing.

Can I remove PMI if my home value went up?

Possibly. A lender-approved appraisal showing you now have 20%+ equity can qualify you for early removal. Expect a seasoning period, and note that you’ll pay for the appraisal yourself.

How do I get rid of PMI on an FHA loan?

FHA loans carry MIP, not PMI, and with less than 10% down it usually lasts the life of the loan. The common fix is refinancing into a conventional loan once you have 20% equity.

How do I avoid PMI without putting 20% down?

Options include lender-paid PMI (in exchange for a higher rate), an 80/10/10 piggyback loan, or a VA loan if you’re eligible. Each carries a tradeoff, usually a higher rate or a second loan.

Does canceling PMI lower my monthly payment?

Yes. PMI is a line item bundled into your monthly payment, so removing it directly reduces what you owe each month — often by $100 to $300 or more.

Is PMI tax-deductible in 2026?

It’s set to return for the 2026 tax year under the One Big Beautiful Bill Act, deductible on Schedule A for itemizers, and phasing out between $100,000 and $110,000 AGI. Confirm the details with a tax professional.

Is PMI a waste of money?

No — it lets you buy sooner and start building equity with less than 20% down. It protects the lender rather than you, but it’s temporary. The mistake is paying it a day longer than the removal rules require.