Private Mortgage Insurance: What It Costs and How to Cancel It
PMI protects the lender and you pay for it. Here is what it costs and the three ways to get rid of it.
Fact-checked and reviewed for financial accuracy by Priya Kannan, CFP®. Read our content review process.
Private mortgage insurance is required on most conventional loans with less than 20 percent down. It protects the lender if you default. It does nothing for you except make the loan possible.
What it costs
Typically 0.3 to 1.5 percent of the loan amount annually, priced primarily on credit score and loan-to-value. On a $360,000 loan, that is roughly $90 to $450 a month. Higher credit scores and larger down payments both reduce it substantially.
The forms it takes
| Type | How you pay | Cancellable? |
|---|---|---|
| Borrower-paid monthly | Added to the monthly payment | Yes, at 80% LTV on request |
| Single premium | One payment at closing | No — but no monthly cost |
| Lender-paid | Built into a higher interest rate | No — only by refinancing |
| Split premium | Partial upfront plus lower monthly | Monthly portion cancellable |
How to cancel it
- Automatic termination. Servicers must end PMI when the balance reaches 78 percent of the original value, based on the original amortization schedule, provided payments are current.
- Borrower request at 80 percent. You may request cancellation when the balance reaches 80 percent of original value. Requirements typically include a good payment history, no junior liens, and sometimes a current appraisal.
- New appraisal after appreciation or improvements. If your home has gained value, many servicers will cancel based on a new appraisal — often after a seasoning period of two to five years. Ask your servicer for their specific written requirements before ordering anything.
FHA is different
FHA loans carry mortgage insurance premiums rather than PMI, and the rules differ substantially: an upfront premium plus an annual premium that, with less than 10 percent down, currently lasts the life of the loan. For FHA borrowers, refinancing into a conventional loan once 20 percent equity exists is the usual path to eliminating it.
Is avoiding PMI worth it?
Not always. PMI on a $360,000 loan might cost $150 a month for four years — roughly $7,200 — while waiting to save an additional $40,000 could mean four more years of rent and a different market. Run both scenarios rather than treating PMI as something to avoid at any cost.
Frequently asked questions
How long do I have to pay PMI?
Until you reach 80 percent loan-to-value and request cancellation, or 78 percent when it terminates automatically. With extra payments or appreciation, this is often three to six years.
Does PMI go away automatically?
At 78 percent of original value based on the original schedule, yes, if payments are current. Earlier cancellation requires a request.
Can I deduct PMI on my taxes?
Deductibility of mortgage insurance premiums has changed repeatedly and depends on current federal law and your income. Consult a tax professional for the current year.
Editorial note. This article is educational and is not financial, tax, or legal advice. Loan terms, rates, insurance costs, and tax rules vary by lender, state, and individual circumstance. Figures shown are illustrative. Confirm details with a licensed lender, tax professional, or attorney before making a decision.
