What is PMI, and how do you get rid of it?

What it is, what it costs, and the fastest legal ways to stop paying it.

The short version

PMI is private mortgage insurance. On a conventional loan, lenders require it when your down payment is less than 20% of the price, meaning your loan is more than 80% of the value. It protects the lender if you stop paying, not you, and you pay for it, usually folded into your monthly payment.

The routes off PMI:

Removal route	When it happens
Request cancellation	Loan reaches 80% of the original value
Automatic termination	Loan reaches 78% of the original value
Midpoint backstop	Halfway through the loan term, if still paying
FHA mortgage insurance	Life of the loan if you put down under 10%, otherwise 11 years

The good news: it is not permanent. By federal law it cancels automatically once your loan reaches 78% of the home's original value, you can request it removed at 80%, and it typically costs about 0.5% to 1.5% of the loan a year while you have it. The rest of this explains how to get off it as fast as legally possible, and the one big exception that catches FHA buyers.

Why you are paying it, and who it protects

PMI exists so lenders will make loans to buyers who put down less than 20%. If you default and the home sells for less than you owe, PMI covers part of the lender's loss. It does nothing for you directly. What it does do is let you buy years earlier than you could if you had to save a full 20% first, which is why it is so common: the 2025 NAR buyer survey found the median first-time buyer put down just 10%. You are not unusual for paying it.

The honest way to see PMI is as the price of not waiting. It buys you the house now instead of after several more years of saving, and in a market where homes appreciate, the equity you gain in those years can outweigh the premiums you pay.

What it costs

PMI usually runs about 0.5% to 1.5% of your loan amount per year, with the exact rate driven by your credit score, your down payment, and your loan-to-value ratio. Lower credit or a smaller down payment means a higher rate.

On a $400,000 loan at 0.8%, that is roughly $3,200 a year, or about $267 a month, added on top of your principal, interest, taxes, and homeowners insurance. It is one more line inside the monthly payment your lender collects and holds. (For how that monthly bundle is built and paid out, see what happens during escrow.)

How it ends on its own

On conventional loans, the Homeowners Protection Act of 1998 gives you three protections, all measured against the home's original value (the lesser of your purchase price or the original appraisal):

Request at 80%. Once your loan balance is scheduled to reach 80% of original value, you can ask your servicer in writing to cancel PMI.
Automatic at 78%. Your servicer must cancel PMI on its own when the balance reaches 78% of original value, as long as you are current.
The midpoint backstop. Even if neither threshold is hit, PMI must end at the halfway point of your loan term, which is the 15-year mark on a 30-year loan.

So the latest you will ever pay PMI on a conventional loan is the midpoint, and in most cases it ends well before that.

How to cancel it early, and why you should

Waiting for the automatic 78% cancellation is the convenient route, but it leaves money on the table. Requesting cancellation at 80% gets you off sooner. To do it:

Send a written cancellation request to your loan servicer.
Be current with a good payment history (generally no payment 30 or more days late in the past 12 months, and none 60 or more days late in the past 24).
Confirm there is no second lien, such as a home equity line, that pushes your combined balance back above 80%.
Be ready to pay for an appraisal if the servicer wants to confirm the home has not lost value.

The appreciation shortcut. If your home has risen in value, you may reach the threshold against current value much faster than against the original price. Many servicers let you cancel based on a new appraisal, often at 75% loan-to-value if you have owned for two to five years, or 80% if you have owned longer. An appraisal runs about $350 to $800 and usually pays for itself within a few months of saved premiums. Making extra principal payments also shortens the timeline, just confirm with your servicer that the extra goes to principal, then request cancellation once you cross 80%.

The FHA exception that catches people

This is the part many buyers learn too late. FHA loans do not have PMI. They have MIP, a mortgage insurance premium, and the rules are not the same. For most FHA loans taken since June 2013 with less than 10% down, MIP lasts the life of the loan. No amount of extra payments or appreciation removes it. With 10% or more down, it lasts 11 years.

The only common way off life-of-loan MIP is to refinance into a conventional loan once you have enough equity, at which point you are back under the cancellable PMI rules above (and may drop mortgage insurance entirely if you have 20% equity). This is exactly why many FHA borrowers refinance to conventional the moment their equity allows it. If you are weighing FHA versus conventional, the difference in how the insurance ends is a real part of the long-run cost.

Should you try to avoid PMI altogether?

You can put 20% down, use a piggyback second loan, or take lender-paid PMI (which trades the monthly premium for a higher rate). Each has trade-offs, and none is free. For many buyers, paying PMI to buy now is the better move, because delaying years to save 20% has its own cost in rent paid and appreciation missed. The right call depends on your numbers, not a rule, so weigh it against what you can comfortably afford. (See how much house you can afford for the budgeting side.)

Frequently asked questions

What is PMI?

PMI, or private mortgage insurance, is a policy you pay for on a conventional loan when your down payment is less than 20%. It protects the lender, not you, if you stop making payments. The cost is usually folded into your monthly mortgage payment.

How do I get rid of PMI?

On a conventional loan, you can request cancellation in writing once your balance reaches 80% of the home's original value, provided you are current and have a good payment history. Your servicer must cancel it automatically at 78%. If your home has appreciated, you may reach the threshold sooner using a new appraisal.

How much does PMI cost?

PMI typically runs about 0.5% to 1.5% of the loan amount per year, depending on your credit score, down payment, and loan-to-value ratio. On a $400,000 loan at 0.8%, that is roughly $3,200 a year, or about $267 a month, usually added to your monthly payment.

Can I cancel FHA mortgage insurance the same way?

No. FHA loans carry MIP, not PMI, and the rules differ. For most FHA loans taken since June 2013 with less than 10% down, MIP lasts the life of the loan and extra payments will not remove it. The common way off is to refinance into a conventional loan once you have enough equity.

Does paying down my mortgage faster remove PMI sooner?

On a conventional loan, yes. Extra principal payments lower your loan-to-value ratio faster, bringing you to the 80% request threshold and the 78% automatic threshold sooner. Confirm with your servicer that extra payments are applied to principal, then request cancellation in writing once you reach 80%.

Sources: the Consumer Financial Protection Bureau and the Homeowners Protection Act of 1998 (borrower-requested cancellation at 80% loan-to-value, automatic termination at 78%, and a midpoint backstop), HUD and FHA guidance on MIP, and 2026 lender summaries from Bankrate and others on PMI cost ranges and cancellation steps. The 2025 NAR Profile of Home Buyers and Sellers reports a 10% median down payment for first-time buyers. These rules apply to conventional loans; FHA, VA, and USDA loans differ.

This article is general information, not financial or lending advice. Confirm the specifics of your situation with a qualified professional before acting.