PMI: How It Works and When It Drops Off

Private Mortgage Insurance (PMI) protects the lender when your down payment is under 20%. Here’s how PMI is charged, what it costs, and when it drops off—plus ways to remove it sooner.

Learn how PMI works, typical costs, and when it drops at 78–80% LTV. See strategies to remove PMI faster using our mortgage calculator.

PMI is an insurance premium added to your monthly mortgage payment on most conventional loans with less than 20% down. It does not protect you; it protects the lender if you default.

• Monthly premium (most common): added to your mortgage payment.
• Single-premium PMI: one upfront payment at closing (sometimes financed).
• Split-premium PMI: smaller upfront + reduced monthly.

PMI depends on credit score, loan-to-value (LTV), and loan type. Typical ranges: 0.20%–1.50% of the loan per year.

Example ranges by LTV (illustrative):

• 95% LTV → ~0.75%–1.10% annual
• 90% LTV → ~0.40%–0.75% annual
• 85% LTV → ~0.20%–0.40% annual

Tip: Actual rates vary by lender and risk. Run scenarios with our tool.

• Automatic: when your balance reaches 78% LTV (based on original value) under the Homeowners Protection Act.
• By request: you can request cancellation at 80% LTV with good payment history—often needs an appraisal.
• Refinance: if your home value rose, refinancing may remove PMI sooner.

• Make extra principal payments each month.
• Reappraise if local prices increased (to prove lower LTV).
• Improve credit and refinance into a lower-cost loan.
• Consider single-premium if seller credits are available.

• PMI (Conventional): monthly, removable around 78–80% LTV.
• MIP (FHA): has upfront and annual premiums; may last the life of the loan at high LTVs.
• VA: no monthly PMI; charges a funding fee instead.

$400,000 home, 10% down → $360,000 loan. If PMI is 0.60% annual, monthly PMI ≈ $360,000 × 0.006 ÷ 12 = $180.

1. Open the Mortgage Calculator.
2. Enter price, down payment, and rate.
3. Choose your state for property taxes.
4. Add extra principal to see how many months until ~78% LTV.
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   Run your numbers now → /mortgage-calculator/

When is PMI automatically removed?
At 78% LTV (based on original value) if you’re current on payments.

Can I remove PMI early?
Often at 80% LTV with a good payment history and a new appraisal.

Is PMI tax-deductible?
It depends on current tax law and your income; consult a tax professional.