What PMI Costs and How to Remove Mortgage Insurance

How Much Is PMI, and When Does It Go Away?

Private mortgage insurance typically costs $30 to $70 per month for every $100,000 borrowed, by Freddie Mac's estimate -- roughly $90 to $210 monthly on a $300,000 loan. Federal law gives it three endpoints: you can request cancellation once your balance hits 80% of the home's original value, your servicer must cancel it at 78%, and everything stops at the loan's midpoint.

That range hides real spread. Thin equity and a bruised credit score price near the top of it; a fat down payment and strong credit sit near the bottom. The removal rules reward people who know them, too. On the worked example below, the gap between waiting passively and forcing an early exit is $10,125 in premiums, which you can check against your own loan in our mortgage calculator.

One framing thought before the mechanics. PMI is a fee for buying with a small down payment, and it is temporary by law. Treat it like a toll, not a verdict.

What PMI Is and What Sets the Price

PMI protects the lender, not you. The CFPB is blunt about this: on a conventional loan with less than 20% down, you buy a policy that repays your lender's losses if you default, and you can still lose the house to foreclosure while the insurer pays the bank. The same requirement usually applies if you refinance a conventional loan with less than 20% equity. It is not homeowners insurance, and it does nothing for your family if you die.

Most borrowers pay PMI as a monthly premium folded into the mortgage payment, which is why so many people never learn their exact number. Some lenders offer a single upfront premium at closing instead, or a split of both; the CFPB cautions that if you pay upfront and then move or refinance, you may not get a refund. A third variant hides the premium inside a higher interest rate. Be careful with that one. A premium comes with an expiration date written into federal law. A rate lasts until you refinance.

Pricing itself turns mostly on two inputs: how much you put down and your credit score, with loan type and term adjusting around the edges. Freddie Mac's $30-$70 band works out to 0.36%-0.84% of the loan amount per year, and quotes outside that band exist in both directions. Since lenders express PMI as an annual percentage of the loan amount, the monthly math is simple:

Loan amount	0.30% annual rate	0.75% annual rate	1.50% annual rate
$200,000	$50/mo	$125/mo	$250/mo
$400,000	$100/mo	$250/mo	$500/mo
$600,000	$150/mo	$375/mo	$750/mo

These rates are illustrative brackets, not quotes. The arithmetic behind any cell is one line: a $400,000 loan at 0.75% costs $3,000 a year, or $250 a month. Before you commit, run the full payment -- principal, interest, taxes, insurance, PMI -- through the real estate affordability calculator, and if the premium is what strains the budget, start with how much house you can afford rather than shopping for cheaper insurance.

The Three Exits Written Into Federal Law

The Homeowners Protection Act builds three off-ramps into eligible conventional loans, and the CFPB's summary of them is worth knowing cold. Every one keys off the home's original value, meaning the lower of the purchase price or the appraisal when you bought (for a refinance, the appraised value at that refinance). Market gains after closing do not move these thresholds an inch.

Exit	Trigger	Who acts	Conditions
Cancellation on request	Balance reaches 80% of original value, on schedule or through extra payments	You, in writing	Good payment history, current on payments, no junior liens, and possibly an appraisal showing the value has not dropped
Automatic termination	Balance is scheduled to reach 78% of original value	Your servicer	Current on payments; if behind, it ends once you catch up
Final termination	The month after the loan's midpoint (year 15 of a 30-year term)	Your servicer	Applies even if the balance never reached 78%

Your scheduled 80% date is printed on the PMI disclosure form from closing, and your servicer must tell you if you cannot find it. The midpoint rule mostly rescues loans with interest-only stretches or balloon features, where the balance lags the calendar. And the statute is a floor, not a ceiling: the CFPB notes that investors like Fannie Mae and Freddie Mac set their own cancellation guidelines, which can be friendlier than the law but never worse. These protections cover single-family principal residences closed on or after July 29, 1999. To see where you stand against the 80% and 78% lines today, our home equity calculator does the division for you.

How to Hit 80% Years Ahead of Schedule

Extra principal is the lever you control completely, so measure it first. Take a $400,000 house bought with 10% down: a $360,000 loan at an illustrative 6.5% over 30 years. The payment on that loan is $2,275.44 a month; where each payment leaves the balance is exactly what the amortization calculator charts. Your request threshold is 80% of $400,000, a $320,000 balance. On the normal schedule you cross it with payment 95, seven years and eleven months in. Add $200 a month against principal and you cross at month 64 instead -- five years and four months, or 31 months sooner. With PMI at $225 a month (0.75% of the original balance), the premiums paid look like this: $24,525 if you coast to automatic termination at month 109, $21,375 if you ask at the scheduled date, $14,400 on the accelerated path. Knowing the rules is worth $3,150 here. Acting on them is worth $10,125.

Appreciation offers a second route, outside the federal ladder. Servicers may remove PMI under their own standards, per the CFPB, and investor guidelines from Fannie Mae and Freddie Mac often allow cancellation based on a new appraisal showing enough equity at current value. The catch is that every servicer writes its own fine print -- most want the loan seasoned before counting market gains, and the appraisal comes out of your pocket even if the answer is no. Call and ask for the requirements in writing before you spend a dollar.

Refinancing is the blunt instrument. A new loan at 20%-plus equity simply carries no PMI, but the fees have to clear the savings. Killing a $225 premium recovers $6,000 in closing costs in just under 27 months ($6,000 / $225 comes to 26.7); sell or refinance again sooner than that and you paid for nothing. Our closing costs guide breaks down which of those fees are negotiable. What a refi should never do is raise your rate just to shed the premium. More on that failure below.

FHA Loans: Different Insurance, Different Rules

If your loan is FHA, none of the ladder above applies to you -- the CFPB's PMI removal page says outright that FHA and VA loans follow different requirements. FHA loans carry their own mortgage insurance premium, MIP, and HUD set its clock in Mortgagee Letter 2013-04: for loans since June 2013 with under 10% down, the annual premium runs for the life of the loan; put down 10% or more and it still runs 11 years. No equity milestone shakes it loose. The realistic exit is refinancing into a conventional loan once you hold roughly 20% equity, trading permanent MIP for no insurance at all. Price both sides with the FHA loan calculator, and if you are still deciding which loan type to start with, that question has its own guide: FHA vs conventional.

When Paying PMI Is the Right Call (and When It Costs You)

Sometimes the premium is the cheapest thing on the table. Say you have $40,000 saved, 10% of a $400,000 house, and you can put away $800 a month. Reaching 20% down means finding another $40,000, which takes 50 months at that pace. If rent runs $1,900, you hand a landlord $95,000 while you wait, and none of it comes back. Buying now costs roughly $225 a month in PMI that federal law guarantees will end -- $21,375 in total on the schedule above, less if you prepay. Freddie Mac makes the same point on its consumer site: the premium is what lets you start building equity now instead of five to ten years from now. Prices might rise or fall during those 50 months; nobody can call it, and this comparison does not need them to rise. Rent against premium, $95,000 against $21,375, is not close. Owning does add carrying costs a renter skips, so run the whole budget rather than the slogan, but do not let a $225 line item scare you away from a purchase the rest of the numbers support.

The trade goes wrong in specific, predictable ways.

Scraping to exactly 20% at closing and arriving with $900 in the bank is the classic one. The first furnace failure lands on a credit card at, say, 24%, and the interest on that balance outruns years of avoided premiums. Keeping $10,000 liquid and paying $125 a month in PMI is the saner version of that trade.

Refinancing into a higher rate just to drop PMI is another. Swap a $360,000 loan at 5.5% ($2,044.04 principal and interest, plus $225 PMI, $2,269.04 all-in) for a 6.5% loan with no PMI, and your payment rises to $2,275.44. You paid thousands in fees, restarted a 30-year clock, and now spend $6.40 more per month. People sign that deal because "no PMI" sounds like winning. Check totals, not labels.

Prepaying the mortgage to kill PMI while carrying card debt runs the same trap in slow motion: every extra $200 aimed at a 6.5% balance instead of a 22% one loses the spread, month after month. Clear the expensive debt first. The 80% line will still be there.

Frequently Asked Questions

How much is PMI on a $300,000 loan?

Freddie Mac's consumer site estimates $30 to $70 per month for every $100,000 borrowed, which puts a $300,000 loan at roughly $90 to $210 a month. Where you land in that range depends mostly on your credit score and down payment size. At a mid-range 0.75% annual rate, the arithmetic gives $187.50 a month, billed as part of your regular mortgage payment.

When does PMI go away automatically?

Two triggers work without any action from you, as long as you are current on payments. Your servicer must terminate PMI on the date your balance is scheduled to reach 78% of the home's original value, and no later than the month after the loan's midpoint -- year 15 on a 30-year mortgage -- even if the balance has not reached 78% by then.

Can I cancel PMI without refinancing?

Yes. The Homeowners Protection Act lets you request cancellation in writing once your balance reaches 80% of the home's original value. You need a good payment history, no junior liens such as a HELOC, and possibly an appraisal proving the value has not declined. Extra principal moves the date up: on a $360,000 loan at 6.5%, an extra $200 a month reaches the 80% line 31 months sooner.

Does PMI ever go away on an FHA loan?

FHA loans carry MIP, not PMI, and the clock is harsher. Under HUD's Mortgagee Letter 2013-04, loans with under 10% down pay the annual premium for the life of the loan; with 10% or more down it lasts 11 years. No equity milestone cancels it. The realistic exit is refinancing into a conventional loan once you hold roughly 20% equity.

Should I wait for 20% down just to avoid PMI?

Run both columns first. Saving an extra $40,000 to reach 20% on a $400,000 home takes 50 months at $800 a month, and renting at $1,900 costs $95,000 over that stretch. Buying at 10% down means about $225 a month in PMI that ends by law. Waiting wins only if your rent is cheap and prices cooperate, and nobody can promise the second part.

Run Your Loan Through the Numbers

The mortgage calculator below takes your price, down payment, rate, and term, and shows what the payment looks like with a PMI line attached. Test three versions of your loan: as scheduled, then with $100 and $200 a month of extra principal, and mark the month each version crosses 80% of the original value. Those dates are the whole game. If the premium total changes which house you should buy, better to find out tonight than at the closing table.