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.
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.
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.
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. Once your loan balance drops to 80% of the original value, you can ask your lender to cancel PMI.
- Automatic cancellation at 78%. By law (the Homeowners Protection Act), the lender must automatically drop PMI once your balance reaches 78% of the original value, provided you're current on payments.
- 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.
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 a low down payment, MIP lasts the life of the loan and can only be removed 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 cancelled 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?
This guide is general information, not financial advice. PMI rates and rules vary by lender and loan. Confirm details with your lender.
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