How Much Is PMI?
If your down payment is under 20%, your lender will usually add private mortgage insurance (PMI) to your payment. Here's what it costs, why it's there, and, most importantly, how to get rid of it. To see PMI inside your full payment, use the free mortgage calculator.
PMI calculator
Typically 0.3% to 1.5%; often near 0.5% to 1% with good credit.
Quick answer: PMI usually runs about 0.3%–1.5% of the loan per year (most often ~0.5%–1%). On a $270,000 loan that's roughly $110–$225 a month. It can be removed once you reach 20% equity.
What PMI is (and who it protects)
Private mortgage insurance protects the lender, not you, if you stop making payments. Lenders require it on conventional loans when you put down less than 20%, because a smaller down payment is statistically riskier for them. You pay the premium, but the coverage is theirs.
If the loan defaults and the foreclosure sale does not cover the balance, the policy reimburses the lender for part of the shortfall. That is its whole scope. PMI does not:
- Protect your equity. A claim paid to the lender does nothing for your own stake in the house.
- Cover missed payments. It is not payment protection, and a late payment still lands on your credit report.
- Cover damage to the property. That is homeowners insurance, a separate premium for the life of the loan.
- Pay off the loan if you die. That is mortgage life insurance, another separate product.
What PMI does for a borrower is indirect but real: by absorbing the lender's downside, it makes a loan possible at 5% or 10% down that would otherwise need 20%. The premium is the price of not waiting to save the difference.
How much PMI costs
PMI is quoted as an annual percentage of your loan amount, then split across 12 monthly payments. The rate usually lands between 0.3% and 1.5% per year, with most borrowers somewhere around 0.5%–1%. Here's what that looks like on a $270,000 loan (a $300,000 home with 10% down):
| PMI rate | Per year | Per month |
|---|---|---|
| 0.5% | $1,350 | ~$113 |
| 1.0% | $2,700 | ~$225 |
| 1.5% | $4,050 | ~$338 |
That's a meaningful chunk of a monthly payment, which is exactly why avoiding or removing PMI matters.
Because the premium is a flat percentage of the loan, the cost scales with the amount borrowed. Here is that same 0.3% to 1.5% span across three home prices, each with 10% down:
| Home price | Loan (10% down) | 0.3% | 0.5% | 1.0% | 1.5% |
|---|---|---|---|---|---|
| $250,000 | $225,000 | $56.25 | $93.75 | $187.50 | $281.25 |
| $300,000 | $270,000 | $67.50 | $112.50 | $225.00 | $337.50 |
| $400,000 | $360,000 | $90.00 | $150.00 | $300.00 | $450.00 |
The $300,000 row is the same loan as the table above it, which is why those figures match. Freddie Mac describes a typical cost of $30 to $70 a month per $100,000 borrowed, which works out to 0.36% to 0.84% a year: a narrower band sitting inside the 0.3% to 1.5% span used here. Both ends of the wider span are real, though, with the lowest rates going to borrowers near 20% down with strong credit and the highest to the smallest down payments and weakest scores.
Loan-to-value, and the two numbers that matter
Every PMI question reduces to loan-to-value: the balance divided by the home's value, as a percentage. It starts at 100% minus your down payment percentage and falls each month as principal is repaid. Two thresholds on the way down control PMI:
- 80% is your right to ask. Once the balance reaches 80% of the original value you can request cancellation in writing. The lender can require that you are current, that there is no second lien, and sometimes an appraisal showing the value has not fallen.
- 78% is automatic. Under the Homeowners Protection Act the servicer must terminate PMI once the balance reaches 78% of the original value on the original amortization schedule, provided you are current.
The distinction matters more than it looks: the automatic date is fixed by the original schedule and ignores anything extra you have paid, so faster paydown only counts if you ask. The calculator at the top of this page computes both dates for your own figures.
What affects your PMI rate
- Down payment / loan-to-value: the closer you are to 20% down, the lower the rate. 15% down costs less PMI than 5% down.
- Credit score: a higher score can dramatically lower your PMI rate; a lower score raises it.
- Loan term: 15-year loans often carry lower PMI than 30-year loans.
- Loan type: this is conventional-loan PMI. FHA loans use a different, often longer-lasting charge called MIP (see below).
How to get rid of PMI
The good news: PMI isn't forever. On a conventional loan you have a few paths to removing it:
- Request it at 20% equity, as soon as the balance reaches 80% of the original value.
- Automatic cancellation at 78%, which the servicer owes you under the Homeowners Protection Act.
- Pay down faster. Extra principal payments get you to that 20% mark sooner.
- Rising home value. If your home appreciates, a new appraisal may show you've already crossed 20% equity. Ask your lender about removal based on current value.
- Refinancing or selling. Both retire the original loan and the PMI attached to it, though refinancing under 20% equity just starts a fresh premium.
How long PMI lasts: a worked example
Take a $400,000 home with $40,000 down, a 30-year loan at 6.5%, and a PMI rate of 0.5%. The loan is $360,000, so loan-to-value starts at 90.0% and PMI costs $150.00 a month. Paying exactly on schedule:
- The balance reaches 80% of the original value after 95 payments, 7 years and 11 months. That is the first month you can request cancellation.
- It reaches 78% after 109 payments, 9 years and 1 month, when the servicer must drop it automatically.
- Riding to the automatic date costs $16,350 in total premiums. Requesting at the 95 month mark instead ends it at $14,250, saving the 14 months in between, about $2,100.
Extra principal moves the date you can ask, but not the automatic one. Adding $200 a month to the same loan brings the balance to 80% of the original value after 64 payments, 5 years and 4 months, instead of 95. Requesting cancellation that month ends PMI at $9,600 paid, $6,750 less than riding the schedule to automatic termination. The automatic date stays at 109 months regardless, because the law calculates it from the original amortization schedule. The request is the part that pays.
That is why PMI changes the arithmetic of paying early: while the premium is on the loan, every extra dollar of principal buys less interest and an earlier end to a charge that buys you nothing.
The simplest way to skip PMI entirely: put 20% down. If you can't yet, a bigger down payment still lowers the PMI rate. Try 5%, 10%, and 15% in the calculator to see how the monthly cost changes.
PMI vs. FHA's MIP
If you have an FHA loan, you don't pay PMI; you pay a mortgage insurance premium (MIP) instead. The big difference: on most modern FHA loans with less than 10% down, MIP lasts the life of the loan; with 10% or more down it ends after 11 years. Otherwise it is removed only by refinancing into a conventional loan. That's an important trade-off to weigh when comparing loan types.
Frequently asked questions
How much does PMI cost per month?
Usually 0.3%–1.5% of the loan per year (commonly ~0.5%–1%). On a $270,000 loan that's roughly $110–$225 a month, depending on your credit, down payment, and term.
How do I get rid of PMI?
Request removal at 20% equity; it's canceled automatically at 78% of the original value if you're current. Extra payments or a higher appraised value can get you there sooner.
Is PMI the same as homeowners insurance?
No. PMI protects the lender when your down payment is under 20%. Homeowners insurance protects you and your property, and is required for the life of the loan.
See it in your payment: the free mortgage calculator adds PMI to your full monthly cost and flags when it's likely required.
More mortgage guides
- What's in a mortgage payment? (PITI, PMI & HOA)
- 15- vs 30-year mortgage: which is right for you?
- How much house can I afford?
- Mortgage calculator FAQ
This guide is general information, not financial advice. PMI rates and rules vary by lender and loan. Confirm details with your lender.
A note on this site: unlike lender-run calculators, everything here runs in your browser. No signup, no lead forms, and nothing you type is uploaded. Try the full calculator.
Sources: Freddie Mac ($30-$70 per month per $100,000 borrowed is their typical range); CFPB: what is PMI; CFPB: removing PMI; CFPB: how mortgage insurance works.
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