Conventional loans
Private mortgage insurance: what it costs, who it protects and how it ends
Private mortgage insurance lets lenders make conventional loans with less than 20 percent down. It protects the lender, not you, and you pay for it. Unlike most mortgage insurance, borrower-paid PMI has an exit set by federal law.
Reviewed November 2026 · Written for Buy Home Tips from the sources listed below
When you put less than 20 percent down on a conventional loan, the lender carries more risk. Fannie Mae and Freddie Mac generally require mortgage insurance on these loans, and private insurers provide it. The CFPB is clear about who benefits: PMI protects the lender if you stop paying. You pay the premium because it makes the loan possible.
What drives the price
PMI is priced by risk. The two biggest factors are your down payment, measured as the loan-to-value ratio, and your credit score. Loan type and term, and the amount of coverage the loan requires, matter too. Fannie Mae's Selling Guide sets minimum coverage levels by loan-to-value ratio and loan type, and insurers price that coverage.
You will see the monthly PMI on page 2 of your Loan Estimate, in the projected payments table. It is one of the easier costs to compare between lenders, because different lenders may work with different insurers.
How it is paid
Borrower-paid monthly PMI. The most common kind. A monthly premium is added to your payment, and it can be canceled under federal rules.
Single-premium PMI. You pay the whole premium upfront at closing, or a seller or lender pays it. There is no monthly charge.
Lender-paid PMI. The lender pays the premium and charges you a higher interest rate. The CFPB notes that different rules apply when the lender pays. Because the cost is built into your rate, it does not come off on a schedule. Refinancing is usually the only way out.
How borrower-paid PMI ends
The CFPB summarizes the federal rules for most mortgages on single-family principal residences closed on or after July 29, 1999.
On request at 80 percent. You can ask the servicer to cancel PMI on the date your balance is scheduled to reach 80 percent of the original value. The date should be on the PMI disclosure you received at closing. You can ask earlier if extra payments get you there sooner. Original value generally means the lower of the sales price and the appraised value at purchase.
Automatically at 78 percent. If you are current, the servicer must end PMI on the date the balance is scheduled to reach 78 percent of the original value.
At the midpoint. PMI must end the month after the midpoint of the loan's amortization schedule, which is 15 years into a 30-year loan, even if you have not reached 78 percent.
A request to cancel at 80 percent comes with conditions. You need a good payment history and must be current. The servicer may also require that there are no other liens on the home and that its value has not fallen below the original value.
Value increases
The federal schedule uses the original value, so a rising market does not move it. Some lenders and servicers let you remove PMI sooner based on a new appraisal and a period of on-time payments. Those are their own policies, not federal rules. Ask your servicer what it offers and what the appraisal would cost before you order one.
The bottom line
PMI is the cost of buying sooner with less down. Compare it between lenders and keep the disclosure that shows your 80 percent date. Then ask to cancel as soon as you qualify, rather than waiting for the automatic end.
Mini calculator: when PMI can end
Finds the months when the scheduled balance reaches 80 percent and 78 percent of the original value, using normal payments only.
Applies to borrower-paid PMI on a conventional loan for a principal residence. Extra payments can move the 80 percent date earlier. FHA and VA rules are different.
Managing PMI from quote to cancellation
- Compare the monthly PMI on Loan Estimates from at least two lenders.
- Ask whether a slightly larger down payment would lower the PMI rate.
- Keep the PMI disclosure you get at closing; it shows the 80 percent date.
- Set a reminder for that date, or earlier if you plan extra payments.
- Write to the servicer to request cancellation when you reach 80 percent.
- Stay current on payments; it is a condition of cancellation.
Questions buyers ask
What is PMI?
The CFPB describes private mortgage insurance as a type of insurance you might be required to pay for a conventional loan, usually when the down payment is less than 20 percent. It protects the lender, not you, if you stop making payments.
How do I get rid of PMI?
For most conventional loans on a principal residence closed on or after July 29, 1999, you can ask to cancel when the balance is scheduled to reach 80 percent of the original value. It ends automatically at 78 percent if you are current, and at the loan's midpoint at the latest.
Can a rise in my home's value end PMI sooner?
The federal rules are based on the original value. Some lenders and servicers have their own policies that consider a new appraisal. Ask your servicer.
What is lender-paid mortgage insurance?
The lender pays the premium and charges you a higher rate instead. The CFPB notes that different rules apply, and because it is built into the rate, it generally does not end unless you refinance.
Sources checked for this page
- CFPB: what is private mortgage insurance
- CFPB: when can I remove private mortgage insurance
- Fannie Mae Selling Guide B7-1-02: mortgage insurance coverage requirements
- CFPB: Loan Estimate explainer
Checked November 2026. Programs and limits change; confirm with the source before you rely on a figure.