What Is PMI in a Mortgage and How Do You Get Rid of It?

Short answer: PMI in a mortgage is private mortgage insurance. It's typically required on a conventional loan when you put less than 20% down, and it protects the lender, not you, if you stop making payments. You can usually pay it monthly, up front or both, and under federal rules you can ask to cancel it once your loan balance is scheduled to reach 80% of your home's original value.

What Is PMI in a Mortgage?

Private mortgage insurance (PMI) is a type of mortgage insurance used with conventional loans. According to the Consumer Financial Protection Bureau (CFPB), you're typically required to have it if your down payment is less than 20% of the purchase price. It may also be required if you refinance a conventional loan with less than 20% equity.

Three things to know about how it works:

• Your lender arranges it. The coverage comes from a private insurance company.
• It protects the lender. In the CFPB's words, PMI protects the lender, not you, if you stop making payments on your loan.
• It makes buying easier but costs more. PMI can help you qualify for a loan you might not otherwise get, but it increases the cost of your loan.

How Do You Pay for PMI?

The CFPB lists three common ways to pay:

1. A monthly premium added to your mortgage payment.
2. A one-time premium paid up front at closing.
3. A combination of an upfront premium and monthly premiums.

The CFPB notes that PMI on conventional loans is usually paid monthly, with little or no upfront payment. Your PMI cost appears on your Loan Estimate and Closing Disclosure, so you can compare it across lenders before you choose.

How Much Does PMI Cost?

There's no single price. The CFPB says PMI rates depend on your down payment and your credit score. To see your actual cost, look at the mortgage insurance line on each Loan Estimate you receive.

Because your credit score affects the price, it's worth checking your credit reports before you apply. Our guide to disputing credit report errors walks through how to correct mistakes. To see how the rest of your payment adds up, try our mortgage payment calculator.

How Does PMI Compare With FHA, VA and USDA Mortgage Insurance?

PMI applies to conventional loans. Government-backed loans handle mortgage insurance differently:

Loan Type	Mortgage Insurance	How You Pay	Can It Be Removed?
Conventional	Private mortgage insurance (PMI)	Usually monthly, with little or no upfront payment	Yes, under the federal rules below
FHA	FHA mortgage insurance premium (MIP), required	Upfront premium plus an annual premium paid monthly	On loans over 15 years, the annual premium lasts 11 years or the full loan term, depending on your down payment
USDA	USDA mortgage insurance, typically cheaper than FHA	At closing and monthly	Check with your servicer
VA	No monthly mortgage insurance	Upfront funding fee instead	No monthly premium to remove

Sources: CFPB (2026) and HUD Mortgagee Letter 2023-05.

FHA Mortgage Insurance Premium Rates

HUD set these FHA premiums in Mortgagee Letter 2023-05, effective for case numbers endorsed on or after March 20, 2023. For FHA loans with terms over 15 years and a base loan amount of $726,200 or less:

• Upfront premium: 1.75% of the base loan amount.
• Annual premium: 0.50% if the loan-to-value ratio is 95% or less, and 0.55% if it's above 95%.
• How long it lasts: 11 years if the loan-to-value ratio is 90% or less; otherwise, the full mortgage term.

The CFPB notes that FHA mortgage insurance costs largely the same regardless of your credit score. For FHA, USDA and VA loans, you can roll the upfront fee into the loan, but that raises your loan amount and total cost.

How Do You Avoid PMI?

According to the CFPB, your main options are:

• Put 20% down. A 20% down payment generally eliminates the PMI requirement and may qualify you for a lower interest rate. If you're still saving, our guide to money market accounts vs. savings accounts compares places to keep a down payment fund.
• Choose a conventional loan without PMI. These loans usually carry a higher interest rate.
• Consider an FHA or other loan program. Depending on your credit score, down payment, lender and market conditions, these may cost more or less than PMI. Keep in mind that FHA loans require their own mortgage insurance, so this swaps PMI for FHA mortgage insurance rather than avoiding it.
• Look at a piggyback second mortgage. It's an alternative to mortgage insurance that may be marketed as cheaper. The CFPB recommends comparing total costs before you decide.

When Can You Remove PMI?

Federal rules give you cancellation rights on mortgages for single-family principal residences that closed on or after July 29, 1999. The CFPB (2026) describes three milestones:

1. At 80%, by request. You can ask your servicer to cancel PMI once your balance is scheduled to reach 80% of your home's original value, or earlier if extra payments get you there. You generally need to make the request in writing, be current with a good payment history, certify there's no second mortgage or other junior lien on the home, and show (for example with an appraisal) that the home's value hasn't dropped below its original value.
2. At 78%, automatically. Even if you don't ask, your servicer generally must end PMI on the date your balance is scheduled to reach 78% of the original value, as long as you're current on payments.
3. At the midpoint of your loan. If PMI is still in place, it must end the month after you reach the halfway point of your loan's amortization schedule (after 15 years on a 30-year loan), as long as you're current.

"Original value" is usually the lower of the purchase price or the appraised value when you bought the home. If you've refinanced, it's the appraised value at the time of the refinance. Our guide to when to refinance covers how to decide whether a refinance makes sense.

Different rules apply to FHA and VA loans and to lender-paid mortgage insurance, so ask your servicer about those. If you want to reach 80% sooner, our guide to paying off your mortgage faster explains how extra principal payments work.

What Should You Ask Your Lender About PMI?

Before you sign, it helps to get clear answers to a few questions:

• How will I pay for PMI: monthly, up front or both?
• What is the PMI amount on my Loan Estimate, and how does it compare with other lenders' offers?
• Is the mortgage insurance borrower-paid or lender-paid? Different cancellation rules apply to lender-paid coverage.
• On what date is my balance scheduled to reach 80% and 78% of the original value?
• Would a larger down payment, a loan without PMI or a different loan program cost less over the time I expect to keep the loan?

What If You're Struggling to Make Payments?

Mortgage insurance protects the lender, not you, so it won't make your payments if you fall behind. The CFPB suggests contacting a HUD-approved housing counselor, which you can find with the CFPB's Find a Counselor tool or by calling the HOPE Hotline at (888) 995-HOPE (4673).

The Bottom Line

PMI is the price of buying with less than 20% down on a conventional loan. It protects your lender, shows up on your Loan Estimate, and depends on your down payment and credit score. Once your balance is scheduled to reach 80% of your home's original value, ask your servicer in writing to cancel it; if you don't, it generally ends at 78%. FHA and VA loans follow their own rules. Our home and mortgage guides cover other parts of buying and paying for a home.

Frequently asked questions

What is PMI in a mortgage?

PMI stands for private mortgage insurance. According to the CFPB, it's typically required on a conventional loan when your down payment is less than 20% of the purchase price. Your lender arranges it through a private insurer, and it protects the lender if you stop making payments.

How do I avoid PMI?

The CFPB says a down payment of 20% generally eliminates the PMI requirement and may qualify you for a lower rate. Other options include a conventional loan without PMI, which usually carries a higher interest rate, or a piggyback second mortgage. Compare the total cost of each before you choose.

When does PMI go away?

Under federal rules for loans on a principal residence that closed on or after July 29, 1999, you can ask in writing to cancel PMI once your balance is scheduled to reach 80% of the home's original value. Your servicer generally must end it automatically at 78%, or the month after you reach the midpoint of your loan term, as long as you're current on payments.

Is FHA mortgage insurance the same as PMI?

No. FHA loans carry a mortgage insurance premium (MIP) with both an upfront and an annual charge. Under HUD Mortgagee Letter 2023-05 (effective March 20, 2023), the upfront premium is 1.75% of the base loan amount. For 30-year loans of $726,200 or less, the annual premium is 0.50% or 0.55% depending on the down payment, and it lasts either 11 years or the full loan term.

Does my credit score affect PMI?

For conventional loans, yes. The CFPB says PMI rates depend on your down payment and credit score. FHA mortgage insurance, by contrast, costs largely the same regardless of your credit score.

Sources

1. CFPB: What Is Private Mortgage Insurance?
2. CFPB: What Is Mortgage Insurance and How Does It Work?
3. CFPB: When Can I Remove Private Mortgage Insurance (PMI) From My Loan?
4. HUD: Mortgagee Letter 2023-05 (FHA Mortgage Insurance Premiums)

This guide is general information, not personal advice. Your situation may differ, so consider talking with a qualified professional, such as a fiduciary financial adviser, CPA or licensed agent, before making a decision.