PMI (Private Mortgage Insurance)
Insurance that protects the lender when your down payment is under 20% (LTV above 80%). It is added to your payment and typically drops off at 20–22% equity.
What does PMI mean?
Private mortgage insurance protects the lender — not you — when your down payment is under 20% (an LTV above 80%), and it is added to your monthly payment. The upside is it lets you buy sooner with less cash down. On conventional loans it is not permanent: you can request cancellation around 20% equity, and it must end automatically at 22%, unlike FHA longer-running premium.
Frequently asked
How much does PMI cost?
Typically 0.46% to 1.5% of the loan a year — about $30 to $70 a month per $100,000 borrowed — added to your payment.
Your credit score and down payment set the exact rate: stronger credit and a larger down payment cost less.
How do I get rid of PMI?
On a conventional loan you can request cancellation once you reach 20% equity, and the lender must remove it automatically at 22%. Paying down principal faster or a rise in your home’s value both get you there sooner.
Is PMI the same as FHA mortgage insurance?
No. PMI is on conventional loans and cancels around 20% equity; FHA charges its own insurance (MIP) that usually lasts the life of the loan. That cancellability is a key long-term advantage of conventional financing.
Put it to use
Mortgage Calculator with PMI
Include private mortgage insurance in your payment and find out exactly when PMI drops off.
Down Payment Calculator
Turn a down-payment percentage into dollars and see whether you clear the 20% PMI threshold.
FHA Loan Calculator
Estimate an FHA payment including upfront and annual mortgage insurance premiums (MIP).
Related terms
All glossary terms