PMI Explained: When You Need It & How to Remove It

Private Mortgage Insurance (PMI) protects your lender if you default on your loan. It's required when your down payment is less than 20% of the home's purchase price.

When Is PMI Required?

PMI is typically required for conventional loans with a loan-to-value (LTV) ratio above 80% — meaning you put down less than 20%. FHA loans have their own mortgage insurance requirements.

How Much Does PMI Cost?

PMI typically costs between 0.3% and 1.5% of the original loan amount per year. On a $300,000 loan, that's $75-$375 per month. Your exact rate depends on your credit score, down payment percentage, and loan type.

How to Remove PMI

• Request removal at 20% equity: Contact your lender when your loan balance reaches 80% of the original home value.
• Automatic cancellation at 22%: Lenders must automatically cancel PMI when your balance reaches 78% of original value.
• Refinance: If your home has appreciated, refinancing can eliminate PMI if the new LTV is under 80%.
• Reappraisal: Some lenders allow a new appraisal to prove your home's value has increased enough to reach 20% equity.