What Is PMI and How Do You Get Rid of It?

Private mortgage insurance (PMI) is a monthly fee on most conventional loans with less than 20% down. It protects the lender if you default — you pay for it, but it provides you no coverage. It typically costs roughly 0.3%–1.5% of the loan amount per year depending on your credit score, down payment, and loan type. On a $300,000 loan, that’s about $75–$375 a month.

To be clear about scope: this applies to conventional loans. FHA loans have their own version (MIP) with different, often stricter removal rules — frequently requiring a refinance to escape.

Is PMI always bad?

No. PMI is what lets buyers purchase with 3–10% down instead of waiting years to save 20% — years during which home prices and rents may rise. The question isn’t “avoid PMI at all costs”; it’s “get rid of it as soon as it stops being useful.”

The four ways out (conventional loans)

1. Automatic termination at 78%. Under the federal Homeowners Protection Act, your servicer must cancel PMI automatically when your balance reaches 78% of the home’s original value (purchase price or original appraisal), if you’re current on payments.

2. Request cancellation at 80%. You can request removal once the balance hits 80% of original value — don’t wait for automatic termination. The request usually must be written, you generally need a good payment history, and the servicer may have additional conditions.

3. Reappraisal after appreciation or improvements. If your home’s current value has risen enough that your loan is at or below ~80% of it (servicers often apply seasoning rules, commonly 75–80% depending on loan age), you can ask for PMI removal based on a new appraisal — typically at your expense ($400–$700ish). Rules here are servicer- and investor-specific, so call yours and ask exactly what they require.

4. Refinance. If you refinance into a new loan at 80% loan-to-value or below, PMI disappears. Only sensible when the refinance math works on its own.

Make it happen faster

• A small extra principal payment each month pulls the 80% date forward — model it with our mortgage calculator.
• Keep records of major improvements; they support a higher reappraisal.
• Check your PMI removal date in your loan documents — servicers must disclose it — and calendar both the 80% and 78% milestones yourself. Servicers handle requests when asked; they rarely volunteer early.