What is PMI (private mortgage insurance)?
Reviewed August 2026
If you put less than 20% down on a conventional loan, you'll likely pay PMI. It protects the lender, not you — but it's also what lets you buy sooner without saving a huge down payment.
Why it exists and what it costs
Private mortgage insurance covers the lender if a low-down-payment borrower defaults. It's added to your monthly payment and typically costs somewhere in the range of 0.3%–1.5% of the loan amount per year, depending on your credit score and down payment.
How to get rid of it
PMI on a conventional loan is cancelable. Under federal rules, you can request cancellation once your balance reaches 80% of the home's original value, and the lender must automatically remove it at 78%. Rising home values or extra principal payments can get you there faster.
Note that FHA loans carry a different, government mortgage-insurance premium (MIP) that often can't be canceled the same way — refinancing into a conventional loan is the usual exit.
Frequently asked
How do I avoid PMI?
Put 20% down on a conventional loan, use a VA loan (no monthly mortgage insurance for eligible borrowers), or build to 20% equity and cancel PMI later.