{"blocks":[{"type":"header","data":{"text":"Key takeaways","level":2}},{"type":"list","data":{"style":"unordered","items":["PMI protects your lender — not you — so understand your rights and when you’re eligible to stop paying it.","You can request PMI cancellation once you reach 80% loan-to-value. You don’t have to wait for your lender to act.","Your lender must automatically cancel PMI once you reach 78% loan-to-value or the midpoint of your loan term, provided you’re current on payments.","PMI typically costs $153 to $500 a month on a $400,000 loan — money you can stop paying the moment you clear these thresholds."]}},{"type":"paragraph","data":{"text":"PMI (private mortgage insurance) may have helped you become a homeowner sooner, but once you’ve built enough equity, don’t keep paying for something that benefits your lender, not you."}},{"type":"paragraph","data":{"text":"Lenders will require PMI when you buy a home with less than 20% down, which protects them if you default on the loan. The cost is rolled into your monthly mortgage payment, but it doesn’t last forever, and you have more control over when it ends than you may realize."}},{"type":"paragraph","data":{"text":"You can request PMI cancellation when your loan reaches 80% of your home’s original value — you don’t have to wait for your lender to act first. And once you reach the 78% threshold, your lender must automatically cancel it, as long as you’re current on your payments."}},{"type":"paragraph","data":{"text":"Knowing how to avoid PMI in the first place and understanding your rights if you pay PMI can save you hundreds of dollars a year or thousands over the life of your loan."}},{"type":"header","data":{"text":"Your right to get rid of PMI — before it’s automatic ","level":2,"anchor":"get-rid"}},{"type":"paragraph","data":{"text":"The Homeowners Protection Act (also known as the PMI Cancellation Act) gives homeowners three specific rights over PMI on conventional loans:"}},{"type":"list","data":{"style":"ordered","items":["You can request PMI cancellation once your loan reaches 80% loan-to-value (LTV). Don’t wait for PMI to disappear on its own. Submit a written request to your mortgage servicer, or through its online portal. Your lender will confirm that your home’s value hasn’t declined, that you have a good payment history — no payment 30 or more days late in the past 12 months, and none 60 or more days late in the past 24 — and that you have no second liens, like a home equity loan or HELOC, on the property.","Your lender must automatically terminate PMI at 78% LTV or the midpoint of your loan term, whichever comes first. For a 30-year loan, the midpoint is at 15 years. This happens automatically as long as your mortgage is current, but it occurs two full percentage points of equity later than the point at which you could have requested cancellation yourself. ","You’re protected from excessive PMI charges. Federal law prohibits lenders from continuing to charge PMI longer than these thresholds allow."]}},{"type":"paragraph","data":{"text":"If your LTV is at or below 80% and you meet the payment and lien requirements above, you can request cancellation today. Calculate your LTV below, then contact your servicer in writing. If you’re not there yet, keep paying down the principal and check back; every payment moves the date closer."}},{"type":"header","data":{"text":"How to calculate your loan-to-value (LTV)","level":3}},{"type":"paragraph","data":{"text":"Your loan-to-value ratio is a measure of how much of your home you own outright."}},{"type":"paragraph","data":{"text":"Current loan balance ÷ original home purchase price = LTV"}},{"type":"paragraph","data":{"text":"For example, if your current mortgage balance is $240,000 and you bought your home for $300,000:"}},{"type":"paragraph","data":{"text":"$240,000 ÷ $300,000 = 0.80, or 80% LTV"}},{"type":"paragraph","data":{"text":"That means you’ve reached the 80% threshold and can ask your lender to cancel PMI."}},{"type":"paragraph","data":{"text":"Don’t assume your lender will notify you when you’re eligible. Contact your mortgage servicer in writing to request PMI cancellation, and keep a copy of your request for your records."}},{"type":"paragraph","data":{"text":" LTV calculator "}},{"type":"paragraph","data":{"text":"Run your own numbers with our LTV calculator — it'll tell you exactly how many payments stand between you and cancellation."}},{"type":"paragraph","data":{"text":" Learn more "}},{"type":"header","data":{"text":"How much does private mortgage insurance cost?","level":2,"anchor":"cost"}},{"type":"paragraph","data":{"text":"The amount you’ll pay for PMI depends on your down payment, your credit score and the amount you borrow. Annual PMI premiums typically range from about 0.46% to 1.50% of the original loan amount, according to the Urban Institute’s Housing Finance Policy Center. Borrowers with a 760 or greater credit score tend to land at the low end of that range, while borrowers with scores between 620 and 639 tend to land at the high end."}},{"type":"paragraph","data":{"text":"On a $400,000 mortgage, that’s about $153 to $500 a month, or $1,840 to $6,000 per year. That’s real money, making it worth knowing exactly when you can stop paying it."}},{"type":"paragraph","data":{"text":"Is a bigger down payment worth it?"}},{"type":"paragraph","data":{"text":"A 20% down payment isn’t realistic for every buyer, which is why more than 800,000 borrowers paid PMI to buy a home in 2024, according to the U.S. Mortgage Insurers (USMI). Down payments are higher than they’ve been in years, and many buyers don’t clear the 20% mark needed to avoid PMI entirely. The National Association of Realtors says the median down payment for repeat buyers in 2025 was 23% — the highest since 2003. For first-time homebuyers, it was 10% — the highest since 1989."}},{"type":"paragraph","data":{"text":"If it would take you more than a year or two of saving to reach 20% down, paying PMI temporarily is usually the better math — you start building equity now instead of watching home prices climb while you wait. If you’re within a year of 20% without straining your other savings goals, waiting saves you the PMI cost entirely."}},{"type":"header","data":{"text":"Types of private mortgage insurance","level":2,"anchor":"types"}},{"type":"paragraph","data":{"text":"Not all PMI works the same way. Depending on your loan, your lender may offer different ways to pay for mortgage insurance."}},{"type":"list","data":{"style":"unordered","items":["Borrower-paid PMI: This is the most common type. You pay the premium as part of your monthly mortgage payment until you’re eligible to remove it.","Lender-paid PMI: Your lender covers the cost upfront, but you pay for it through a slightly higher mortgage rate. Your monthly payment is lower, but you may pay more over the life of the loan — and you can’t cancel it the way you can with borrower-paid PMI, since it’s baked into your rate rather than billed separately.","Single-premium PMI: You pay the full premium once at closing, rather than monthly. This lowers your monthly payment but requires more money upfront. ","Split-premium PMI: Part of the premium is paid upfront at closing, and the rest is billed as smaller monthly payments, reducing your monthly cost without the full upfront hit of single-premium PMI"]}},{"type":"header","data":{"text":"How to avoid paying PMI","level":2,"anchor":"avoid"}},{"type":"paragraph","data":{"text":"You can avoid paying PMI altogether with a 20% down payment or larger. If that’s not realistic right now, here’s how to build equity faster and clear the threshold sooner:"}},{"type":"list","data":{"style":"unordered","items":["Pay down your mortgage earlier: Extra biweekly or annual principal payments can get you to 20% equity faster than your amortization schedule alone.","Refinance your mortgage: If mortgage rates have fallen, refinancing to a new loan with a lower balance could help you reach the PMI threshold sooner. It costs money to refinance, and this typically only makes sense if you can lower your interest rate. But shop it first: In 2025, 78.7% of refinance borrowers overpaid on their new rate simply by not comparing offers, according to Bankrate’s Hidden Homeownership Tax research.","Piggyback loan: Also known as an 80-10-10 loan, you put 10% down, take an 80% first mortgage and use a 10% second loan (home equity loan or HELOC) to cover the rest. You’ll have two payments, and the second loan usually carries a higher rate, so it’s worth considering only if the combined cost of the second loan beats what you’d pay in PMI.","Get a new appraisal: If your home has appreciated or you’ve made improvements that raised its value, a new appraisal could show you’ve already crossed the 20% equity line, even without extra payments."]}},{"type":"header","data":{"text":"PMI vs. other mortgage insurance types","level":2,"anchor":"vs"}},{"type":"paragraph","data":{"text":"The type of mortgage insurance you’ll need depends on the type of loan you have. Options include:"}},{"type":"list","data":{"style":"unordered","items":["Private mortgage insurance (PMI): Charged on conventional loans with less than 20% down, as part of your monthly payment. Cancels once you hit the LTV thresholds above.","FHA mortgage insurance premium (MIP): Required on all FHA loans, this is an upfront charge plus a monthly premium. Unlike PMI, MIP usually lasts the life of the loan unless you refinance out of it.","VA funding fee: VA loans don’t charge monthly mortgage insurance, but most borrowers pay a one-time funding fee at closing (or roll it into the loan).","USDA guarantee fee: An upfront fee plus a smaller annual fee that shrinks every year as the balance drops on your USDA loan.","Mortgage title insurance: Title insurance is a separate product that protects against ownership disputes or title defects — not mortgage default insurance at all, and not a substitute for any of the above."]}},{"type":"paragraph","data":{"text":"Compare the total cost of each over the time you plan to stay in the home — not just the sticker price at closing."}},{"id":"fp0iw6jb-rqjjmohj","type":"table","data":{"withHeadings":true,"stretched":false,"content":[["Loan type","Mortgage insurance rate","Cost for a $400,000 loan"],["Conventional loan","0.46% to 1.5% of the loan amount annually (Urban Institute)","$153–$500/month"],["FHA loan","1.75% upfront; 0.15%–0.75% annually (most borrowers pay 0.55%)","
Upfront: $7,000. Annually: $600–$3,000"],["USDA loan","1% upfront; 0.35% annually on the remaining balance","Upfront: $4,000. Annually: about $1,400 in year one, declining as your balance drops"],["VA loan","1.25%–3.3% upfront, depending on down payment and whether it’s your first use of the benefit","$5,000–$13,200"]]}},{"type":"paragraph","data":{"text":"Veterans receiving VA disability compensation are exempt from the funding fee entirely — check your Certificate of Eligibility before closing. And if you’re refinancing an existing VA loan rather than buying, ask your lender specifically about the VA Interest Rate Reduction Refinance Loan (IRRRL) — it carries a lower 0.5% funding fee designed for rate-and-term refinances, not the purchase fee schedule shown above. In 2025, 81% of VA borrowers overpaid on their rate, according to Bankrate’s Hidden Homeownership Tax research, so shop the IRRRL rate the same way you’d shop any refinance."}},{"type":"header","data":{"text":"Is PMI tax-deductible?","level":2,"anchor":"tax"}},{"type":"paragraph","data":{"text":"Yes — starting with the 2026 tax year, you can deduct PMI as mortgage interest if you itemize and your income falls under the phase-out limits."}},{"type":"paragraph","data":{"text":"The One Big Beautiful Bill Act permanently restored the mortgage insurance premium deduction after it had expired in 2021. It applies to premiums you pay starting January 1, 2026, and you’ll claim it on your 2026 tax return, filed in spring 2027."}},{"type":"paragraph","data":{"text":"The deduction is treated as mortgage interest, so it’s subject to the same $750,000 cap on qualifying mortgage debt as regular mortgage interest ($375,000 if you’re married filing separately). It phases out once your adjusted gross income (AGI) — your income before itemized deductions — passes $100,000 ($50,000 if married filing separately): You lose 10% of the deduction for every $1,000 of AGI above that line, and it disappears completely at $109,000 AGI ($54,500 if married filing separately)."}},{"type":"paragraph","data":{"text":"The last time this deduction was available, it averaged $1,454 per year for qualifying taxpayers and was claimed more than 44 million times, according to USMI. Talk to a tax professional to confirm whether it applies to your specific return."}},{"type":"header","data":{"text":"Frequently asked questions","level":2,"anchor":"faq"}},{"type":"list","data":{"style":"unordered","items":[" What’s the difference between mortgage insurance and homeowners insurance?

Mortgage insurance and homeowners insurance protect two different parties. Mortgage insurance protects your lender if you stop making payments. Homeowners insurance protects you, covering damage to your home from fire, storms, theft and other covered events.

"," Is PMI based on credit score?

Yes. Borrowers with a 760 or better credit score typically get the lowest PMI rates, while borrowers in the 620 to 639 range typically pay the most. Your down payment, loan amount and loan-to-value ratio also factor in.

"," How much does PMI cost on a $300,000 mortgage?

Based on the 0.46% to 1.50% range, PMI on a $300,000 mortgage runs about $1,380 to $4,500 a year, or roughly $115 to $375 a month. Your actual cost depends on your down payment, credit score and lender.

"," How long do you have to pay PMI?

You can request cancellation yourself once your loan reaches 80% of your home’s original value. Your lender must cancel it automatically at 78%, as long as you’re current on payments — no payment 30 or more days late in the past 12 months, and none 60 or more days late in the past 24 months. You can avoid PMI entirely with a 20% or larger down payment.

"," Does PMI protect me if I can’t make my mortgage payments?

No. This is one of the biggest misconceptions about PMI. It protects your lender, not you. If you fall behind on your mortgage, PMI may help reimburse the lender for its losses, but it doesn’t cover your missed payments or protect you from foreclosure.

"]}}]}

Linda Bell

PMI got you into your home. It shouldn’t overstay its welcome.