How much does PMI cost?

PMI typically costs 0.5% to 1.5% of the original loan amount per year, or $50-$150 per month per $100,000 borrowed. On a $336,000 loan (20% down on $420K), PMI ranges from $140-$420/month depending on your credit score and down payment.

How do I get rid of PMI?

PMI is automatically removed when your loan balance reaches 78% of the original home value. You can request removal at 80% LTV. Other ways: refinance with 20%+ equity, get a new appraisal showing sufficient equity, or make extra payments to reach 80% LTV faster.

PMI (Private Mortgage Insurance) Guide: Cost, Removal, and When to Pay It (2026)

Private Mortgage Insurance (PMI) is required when you put less than 20% down. It protects the lender (not you) — but understanding it can save you thousands.

For full affordability planning and scenario frameworks, start with the Mortgage Affordability hub.

How PMI Costs Are Determined

Factor	Impact on PMI Rate
Credit score	Higher score = lower PMI
Down payment percentage	More down = lower PMI
Loan amount	PMI is a % of loan balance
Loan type	Conventional, FHA, VA each differ
Loan term	30-year vs. 15-year
Property type	Single-family vs. condo

PMI Cost by Credit Score and Down Payment

Monthly PMI per $100,000 Borrowed

Credit Score	3% Down	5% Down	10% Down	15% Down
760+	$30	$25	$18	$12
740-759	$38	$33	$22	$15
720-739	$50	$42	$30	$20
700-719	$63	$55	$38	$25
680-699	$80	$72	$50	$33
660-679	$100	$90	$65	$42
640-659	$125	$110	$80	$55
620-639	$150	$135	$100	$70

Real-World PMI Examples

For a $420,000 home purchase:

Down Payment	Loan Amount	Credit 760+	Credit 700	Credit 660
3% ($12,600)	$407,400	$122/mo	$257/mo	$407/mo
5% ($21,000)	$399,000	$100/mo	$220/mo	$359/mo
10% ($42,000)	$378,000	$68/mo	$144/mo	$246/mo
15% ($63,000)	$357,000	$43/mo	$89/mo	$150/mo
20% ($84,000)	$336,000	$0	$0	$0

Types of PMI

Type	How It Works	Cost	Who Pays
Borrower-paid (BPMI)	Monthly premium added to mortgage payment	0.5-1.5%/year	Borrower (monthly)
Lender-paid (LPMI)	Lender pays PMI; charges higher interest rate	0.25-0.50% higher rate	Borrower (via higher rate, permanent)
Single-premium	One upfront payment at closing	1.5-3.0% of loan	Borrower (lump sum at closing)
Split-premium	Partial upfront + lower monthly	Combination	Borrower (hybrid)
FHA MIP	Required on all FHA loans	0.55%/year + 1.75% upfront	Borrower (often for life of loan)

How to Remove PMI

Automatic Removal (Conventional Loans)

Trigger	LTV Ratio	Action Required
Automatic termination	78% of original value	Automatically removed; no action needed
Borrower-requested removal	80% of original value	You must request in writing
Midpoint of loan term	Any (e.g., year 15 of 30-year)	Automatically removed regardless of LTV
Good payment history required	—	Must be current; no 30-day lates in 12 months

Faster PMI Removal Strategies

Strategy	How It Works	Savings
Extra principal payments	Pay down to 80% LTV faster	Months to years of PMI saved
Home improvements that increase value	New appraisal shows 80%+ equity	Immediate removal
Market appreciation	Rising home values increase equity	Request new appraisal
Refinance with 20%+ equity	New loan without PMI	Also potentially lower rate
Recast mortgage	Make lump-sum payment, recalculate	Lower payment + reach 80% faster

PMI Removal Timeline (Example)

$420,000 home, 5% down ($21K), $399,000 loan at 6.5%:

Payment Schedule	Years Until 80% LTV	Total PMI Paid	PMI Saved by $200/mo Extra
Minimum payments only	9.5 years	~$19,000	—
+$200/month extra	6.5 years	~$13,000	$6,000
+$500/month extra	4.5 years	~$9,000	$10,000

FHA Mortgage Insurance: Different Rules

FHA loans have different (and generally worse) mortgage insurance rules:

Feature	Conventional PMI	FHA MIP
Upfront premium	None	1.75% of loan amount
Annual premium	0.5-1.5%	0.55% (with 3.5% down)
Removable?	Yes (at 80-78% LTV)	Only if 10%+ down and after 11 years
Down payment less than 10%	PMI removable at 80% LTV	MIP for life of loan
Down payment 10%+	PMI removable at 80% LTV	MIP removable after 11 years
Refinance to remove?	Can refinance to lower PMI	Must refinance to conventional to remove

FHA MIP Cost Example

$420,000 home, 3.5% down ($14,700), FHA loan of $405,300:

Cost	Amount
Upfront MIP (1.75%)	$7,093 (rolled into loan)
Annual MIP (0.55%)	$2,268/year ($189/month)
Total MIP over 30 years (if kept)	~$75,000+
Strategy: Refinance to conventional when 20% equity	Saves $45,000+

Should You Put 20% Down to Avoid PMI?

Scenario	Put 20% Down	Put 5% Down + PMI	Winner
Home price: $420K	$84,000 down	$21,000 down	Depends on opportunity cost
Monthly payment (P&I only)	$2,125	$2,540	20% down saves $415/mo
PMI cost	$0	+$100-$220/mo	—
Total monthly	$2,125	$2,640-$2,760	20% down saves $515-$635/mo
Cash remaining to invest	$0 extra	$63,000 invested	At 8%: $63K → $136K over 10 yrs
Break-even	—	—	~7-10 years

Key insight: If you can earn 8%+ investing the $63,000 difference, 5% down + PMI may be financially better — especially since PMI disappears in ~6-10 years. But the lower monthly payment of 20% down provides more security and cash flow.

PMI Tax Deductibility

Tax Year	PMI Deductible?	Income Phase-out
2024-2026	Potentially yes (if extended)	Phases out above $100,000 AGI
Historical	Was deductible 2007-2021, lapsed, renewed	Varies by legislation
Check current year	Verify with tax preparer	May require itemizing

Written by WealthVieu

WealthVieu researches and writes data-driven personal finance guides using primary sources including the IRS, Bureau of Labor Statistics, Federal Reserve, and Census Bureau.

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