PMI (Private Mortgage Insurance): What It Covers, How You Pay and When It Ends
Private mortgage insurance (PMI) is insurance you may have to buy when you take out a conventional mortgage with less than 20% down. It protects the lender, not you, if you stop paying. Federal law lets you ask to cancel it when your balance is scheduled to reach 80% of the home's original value, and requires the servicer to end it automatically at 78% if you are current on payments. FHA loans use a different kind of mortgage insurance, with different rules.
What PMI Is and Who It Protects
The Consumer Financial Protection Bureau (CFPB) describes PMI as mortgage insurance you might be required to buy on a conventional loan with a down payment of less than 20% of the purchase price. The lender arranges it, and private insurance companies provide it. The requirement usually also applies when you refinance a conventional loan with less than 20% equity.
PMI insures the lender against loss if borrowers do not make their payments. It does not protect you: if you fall behind, you can still lose your home through foreclosure. PMI can help you qualify for a loan you might not otherwise get, but it increases the cost of the loan. With 20% down, a conventional loan does not require PMI.
How You Pay for PMI
| Method | Where it shows on your loan forms |
|---|---|
| Monthly premium (the most common) | Added to your mortgage payment. Page 1 of the Loan Estimate and Closing Disclosure, Projected Payments section |
| One-time up-front premium at closing | Page 2, section B. If you move or refinance, you might not get a refund |
| Both up-front and monthly | Up-front part on page 2, section B; monthly part on page 1 |
Some lenders offer low down payment conventional loans without PMI, in exchange for a higher interest rate. The CFPB notes that this can cost more or less than PMI, depending on factors such as how long you plan to stay in the home. Ask each lender to price the options over the years you expect to stay. The closing costs guide explains how to read the Loan Estimate.
What PMI Costs
We do not quote a percentage, because we found no government source that publishes a typical PMI rate. Use the premium on your own Loan Estimate, and ask lenders what PMI choices they offer.
What is public is how much coverage the lender must buy. More coverage means a higher premium, and the coverage rises as your down payment falls. Fannie Mae's standard coverage for a fixed-rate loan with a term over 20 years:
| Loan-to-value (LTV) | Down payment | Standard mortgage insurance coverage |
|---|---|---|
| 80.01% to 85% | 15% to just under 20% | 12% |
| 85.01% to 90% | 10% to just under 15% | 25% |
| 90.01% to 95% | 5% to just under 10% | 30% |
| 95.01% to 97% | 3% to just under 5% | 35% |
The down payment column assumes the loan is the price minus the down payment, with no financed fees. Fannie Mae allows lower coverage in some cases for an extra loan-level price adjustment, and HomeReady loans have lower standard coverage at the higher LTVs.
When PMI Ends: 80%, 78% and the Midpoint
The Homeowners Protection Act (12 U.S.C. 4901 and 4902) sets three ways PMI ends. The CFPB says these rules apply to loans for single-family principal residences that closed on or after July 29, 1999. They do not apply to FHA or VA loans, and different rules apply if the lender pays for the mortgage insurance.
| Rule | When | What you must do |
|---|---|---|
| Cancellation on request | Balance is scheduled to fall to 80% of original value, or reaches it early through extra payments | Ask in writing; good payment history; current on payments; no junior liens; show the value has not fallen below original value |
| Automatic termination | Balance is scheduled to reach 78% of original value | Be current on payments. If you are not, PMI ends shortly after you catch up |
| Final termination | The month after the midpoint of the loan's amortization schedule (after 15 years on a 30-year loan) | Be current on payments. Applies even if the balance has not reached 78% |
"Original value" generally means the lower of the contract sales price or the appraised value when you bought the home. If you refinanced, it is the appraised value at the refinance. The first date you can ask for cancellation should be on the PMI disclosure form you got with your mortgage.
"Good payment history" has a legal definition. You qualify if you have not made a payment 60 days or more late in the 12-month period that began 24 months before the cancellation date (or your request, if later), and no payment 30 days or more late in the 12 months before that date.
The 80% and 78% rules do not apply to loans that the statute treats as high risk at the time the loan is made; those follow separate termination dates in the law. After PMI is canceled or terminated, the servicer must return any unearned premiums within 45 days. Fannie Mae and Freddie Mac may set their own cancellation rules, but the CFPB says those cannot be less favorable to the borrower than the federal rules.
Hypothetical Example: When PMI Would End
This is a hypothetical illustration, not a quote or a forecast. Assume a $400,000 home bought with 10% down, so a $360,000 loan, on a 30-year fixed rate of 7.18%. That rate is Freddie Mac's weekly national average for a 30-year fixed loan as of November 5, 2026. Your rate will differ.
| Milestone | Balance | Reached on schedule |
|---|---|---|
| Monthly principal and interest | $2,438.77 | Every month |
| 80% of original value: you can ask to cancel | $320,000 | Payment 103 (8 years, 7 months) |
| 78% of original value: automatic termination | $312,000 | Payment 117 (9 years, 9 months) |
| Midpoint: final termination | Any balance | After 15 years |
Extra principal payments move the 80% date earlier, because you can ask once the balance actually reaches 80% of original value. Rising home prices do not change these statutory dates, because the law uses the original value. The next section covers removal based on today's value.
Removing PMI Early Based on Today's Value
Some lenders and servicers will also remove PMI under their own standards. For loans owned by Fannie Mae, its Servicing Guide lets you ask for termination based on the property's current value. For a one-unit principal residence or second home, the LTV must be 75% or less if the loan is between two and five years old, or 80% or less after five years. The servicer must get a property valuation based on an inspection of the interior and exterior. You also need an acceptable payment record: current when you ask, no payment 30 or more days late in the last 12 months and none 60 or more days late in the last 24 months. Two- to four-unit homes and investment properties need 70% or less after two years. Ask your servicer what it requires before you pay for an appraisal.
PMI vs. FHA Mortgage Insurance (MIP)
FHA loans charge a mortgage insurance premium (MIP) instead of PMI. The CFPB says FHA and VA loans have different requirements from the PMI rules above. FHA charges two parts: an upfront premium (UFMIP) of 1.75% of the base loan amount, which can be financed into the loan, and an annual premium paid monthly. HUD's annual rates for most FHA loans with a term over 15 years:
| Base loan amount | LTV | Annual MIP | How long you pay |
|---|---|---|---|
| $726,200 or less | 90% or less | 0.50% | 11 years |
| $726,200 or less | Over 90% up to 95% | 0.50% | Mortgage term |
| $726,200 or less | Over 95% | 0.55% | Mortgage term |
| Over $726,200 | 90% or less | 0.70% | 11 years |
| Over $726,200 | Over 90% up to 95% | 0.70% | Mortgage term |
| Over $726,200 | Over 95% | 0.75% | Mortgage term |
The main difference is how long you pay. With an FHA loan and an LTV over 90%, the annual MIP lasts for the mortgage term. At 90% or less, it lasts 11 years. Conventional PMI ends under the federal rules above. For FHA, VA and 3% down conventional options, see the low down payment programs.
PMI and Your Taxes
For tax years beginning after December 31, 2025, Public Law 119-21, section 70108, removes the end date for treating qualified mortgage insurance premiums as mortgage interest. So they can count as deductible qualified residence interest on 2026 returns if you itemize, subject to the other conditions in the law. The closing costs guide covers the 2025 and 2026 rules. Ask a tax professional about your own return.
Sources & Methodology
- What PMI is and how you pay: CFPB, What is private mortgage insurance?
- Removal rules: CFPB, When can I remove PMI from my loan?, and the Homeowners Protection Act, 12 U.S.C. 4901 (good payment history) and 12 U.S.C. 4902 (cancellation, termination, refund of premiums). The CFPB pages did not respond to our automated retrieval, so we used archived copies from October 24 and 26, 2026.
- Coverage levels: Fannie Mae Selling Guide B7-1-02. Current-value termination: Fannie Mae Servicing Guide B-8.1-04.
- FHA premiums: HUD Single Family Housing Policy Handbook 4000.1, Update 18, Appendix 1.0 (last revised August 12, 2026).
- Rate used in the example: Freddie Mac Primary Mortgage Market Survey, week of November 5, 2026. Tax change: Public Law 119-21, section 70108.
- All sources retrieved November 7, 2026. The example uses a standard fixed-rate amortization formula with no extra payments.
FAQ
Is PMI required with less than 20% down?
Usually, on a conventional loan. The CFPB says you might be required to buy PMI with a down payment of less than 20% of the purchase price, and that with 20% down a conventional loan does not require it. Some lenders offer loans without PMI at a higher interest rate.
When does PMI go away?
You can ask to cancel it when your balance is scheduled to reach 80% of the home's original value. The servicer must end it automatically at 78% if you are current, and in any case the month after the midpoint of the loan term (after 15 years on a 30-year loan).
Can I remove PMI if my home has gone up in value?
Not under the federal rules, which use the original value. Fannie Mae's servicing rules allow a borrower-requested termination based on current value at 75% LTV or less after two to five years, or 80% or less after five years, for a one-unit principal residence or second home. Ask your servicer for its own rules.
Does FHA mortgage insurance ever go away?
On loans over 15 years, the annual MIP lasts 11 years if the LTV is 90% or less, which is roughly 10% or more down. Above 90% LTV, it lasts for the mortgage term.
This page is for educational purposes only and is not personalized financial, legal or tax advice. The example is hypothetical. Check your Loan Estimate, PMI disclosure and servicer before you decide.
