Private Mortgage Insurance (PMI) is insurance required on most conventional loans when the borrower puts down less than 20%. It protects the lender, not the borrower, in the event of default.

How can I remove PMI from my mortgage?

There are three ways to remove PMI: (1) It automatically cancels at 78% loan-to-value under the Homeowners Protection Act. (2) You can request early removal at 80% LTV with a clean payment history and updated appraisal. (3) You can refinance into a new loan at 80% LTV or below, which removes PMI immediately.

What is the difference between PMI and MIP?

PMI applies to conventional loans and is cancellable once you reach 20% equity. MIP (Mortgage Insurance Premium) applies to FHA loans and may last for the life of the loan if less than 10% was put down. The fastest way to eliminate FHA MIP is to refinance into a conventional loan once sufficient equity is reached.

How much does PMI cost per month?

PMI typically costs between 0.3% and 1.5% of the loan amount annually. On a $400,000 loan at 0.70%, that works out to approximately $233 per month.

Can home appreciation help me remove PMI early?

Yes. If your home has appreciated in value, you may be able to request PMI removal before reaching 80% LTV based on your original purchase price. An updated appraisal or broker price opinion can confirm your new equity position, potentially saving hundreds per month.

What Is PMI and How Do I Remove It?

If you’re planning to buy a home — or if you already have a mortgage — you may have heard the term PMI. Many buyers aren’t sure what PMI is, why they’re paying it, or how to get rid of it. This guide explains everything you need to know about Private Mortgage Insurance, including how it works, how much it costs, and the exact steps to remove it when eligible.

What Is PMI?

Private Mortgage Insurance (PMI) is a type of insurance required on most conventional loans when the buyer puts down less than 20% on a home purchase. PMI protects the lender — not the borrower — in case of default, but it does allow buyers to purchase a home without waiting to save a full 20% down payment.

PMI is not required for:

VA loans — zero PMI
USDA loans — uses a different guarantee fee structure
FHA loans — uses MIP (Mortgage Insurance Premium) instead of PMI

How Much Does PMI Cost?

PMI is based on several factors including your credit score, loan amount, down payment, and loan type. Premiums usually range between:

0.3% to 1.5% of the loan amount annually

Example:

Loan Amount: $400,000
PMI Rate: 0.70%
Annual PMI Cost: $400,000 × 0.007 = $2,800/year
Monthly PMI Cost: $2,800 ÷ 12 = $233/month

When Does PMI Apply?

You’ll typically pay PMI when:

Your down payment is less than 20%
You’re using a conventional mortgage
Your lender requires risk-based pricing due to credit or debt-to-income factors

PMI automatically ends once certain equity thresholds are reached — but you may be able to remove it sooner by request.

How to Remove PMI: 3 Paths

There are several ways to eliminate PMI depending on your loan terms and how quickly your home value grows.

1. PMI Automatically Ends at 78% LTV

By federal law under the Homeowners Protection Act:

Your PMI must automatically cancel once your loan reaches 78% loan-to-value (LTV) based on your original purchase price
This happens through normal amortization as you make scheduled payments
You don’t need to request this — your lender is legally required to remove it

2. Request PMI Removal at 80% LTV

You can request PMI removal early once you reach 80% LTV. This can happen faster if:

You’ve made extra principal payments
Your home has appreciated in value
Your loan balance has dropped faster than the original schedule

Your lender will typically require:

A clean payment history
An updated property valuation (BPO or appraisal)
Verification you still occupy the home (for certain programs)

3. Refinance to Remove PMI

If your property value has increased significantly, refinancing into a new loan without PMI may be the fastest option. Home appreciation can push you below the 80% LTV threshold even if you didn’t put down 20% initially.

Refinancing removes PMI immediately if your new loan meets the 80% LTV requirement — and may also lower your interest rate at the same time.

PMI vs. MIP: What’s the Difference?

Some borrowers confuse PMI with MIP (Mortgage Insurance Premium).

PMI → Conventional loans — cancellable once you reach 20% equity
MIP → FHA loans — may last for the life of the loan depending on your down payment

Unlike PMI, FHA’s MIP may continue for the life of the loan if you put down less than 10%, unless you refinance into a conventional loan.

Can I Remove FHA Mortgage Insurance (MIP)?

Yes — but the process is different from conventional PMI removal:

If you put down 10% or more: MIP lasts for 11 years then drops off
If you put down less than 10%: MIP lasts for the life of the loan

The fastest way to remove FHA MIP is to refinance into a conventional loan once you reach 20% equity.

How Rising Home Values Help You Remove PMI Faster

In many Texas markets, home values have risen enough that homeowners reach 20% equity far sooner than expected. Even a modest 5–10% increase in value can eliminate PMI years ahead of schedule.

An updated valuation or appraisal may be all you need to request early PMI removal. I can walk you through whether this makes sense for your specific situation.

Ready to Find Out If You Can Remove PMI?

If you’re unsure whether you qualify for PMI removal or if refinancing might save you money, I can prepare a personalized analysis. Removing PMI can often save homeowners $150–$400 per month depending on loan size and rate.

Start Your Application

Schedule a 30-Minute Consultation

I’ll help you review your equity, payment history, loan program, and options to eliminate PMI as quickly as possible.

This content is for educational purposes only and does not constitute a commitment to lend. PMI removal requirements vary by lender and loan program. All loans are subject to underwriting and eligibility requirements. Wayne Wallace, NMLS #745186 • Homewood Mortgage, LLC • NMLS #294974.