PMI Removal Calculator: How to Get Rid of PMI on Your Mortgage

Private mortgage insurance (PMI) is insurance that protects your lender if you default on your loan. It’s required on conventional loans when you put down less than 20% and typically costs 0.5-1.5% of your loan amount annually. On a $300,000 loan, that’s $1,500-$4,500 per year or $125-$375 per month added to your mortgage payment. PMI can be removed once you reach 20% equity.

How Does Private Mortgage Insurance Work?

PMI protects the lender—not you. If you stop making payments and the lender forecloses, PMI covers their losses. The insurance company pays the lender the difference between what they recover from selling the home and what you owed.

Why lenders require it: With less than 20% down, you have less “skin in the game.” Statistically, borrowers with smaller down payments default more often. PMI offsets this risk.

Who pays: You pay the premiums, even though the lender is the beneficiary. It’s the cost of getting a loan with a smaller down payment.

How Much Does PMI Cost on a Conventional Loan?

PMI Cost Factors by Credit Score

PMI costs vary based on several factors.

PMI Cost Factors

Factor	Impact on PMI Rate
Down payment size	Less down = higher PMI
Credit score	Lower score = higher PMI
Loan type	Fixed vs ARM affects rate
Loan-to-value ratio	Higher LTV = higher PMI
Loan term	15 vs 30 year

PMI Rate Chart by Credit Score

Credit Score	5% Down	10% Down	15% Down
760+	0.30%	0.22%	0.19%
720-759	0.45%	0.35%	0.28%
680-719	0.70%	0.55%	0.45%
640-679	1.05%	0.85%	0.70%
620-639	1.50%	1.25%	1.10%

Monthly PMI Cost Examples

For a $350,000 loan:

Credit Score	5% Down PMI	Monthly Cost
760+	0.30%	$88
720-759	0.45%	$131
680-719	0.70%	$204
640-679	1.05%	$306
620-639	1.50%	$438

Marcus Johnson has a 695 credit score and puts 5% down on a $320,000 home. His PMI rate is 0.75%, costing him $190 per month. Over three years until he can remove it, he’ll pay $6,840 in PMI.

Types of Private Mortgage Insurance

PMI comes in several forms. Your lender may offer one or more options.

Monthly PMI Payment (Most Common)

Added to your monthly mortgage payment
Paid for duration until removed
Most common type
Easiest to cancel when you reach 20% equity

Single-Premium PMI (Upfront)

Paid as one lump sum at closing
Can be financed into the loan
No monthly PMI payment
Not refundable if you sell or refinance early

Good for: Borrowers who plan to stay long-term and want lower monthly payments.

Cost example: On a $300,000 loan with 5% down and 720 credit score, single premium might be $5,100 upfront instead of $113/month.

Split-Premium PMI

Portion paid upfront, portion monthly
Lower monthly payment than standard
Upfront portion is non-refundable
Combines benefits of both types

Lender-Paid PMI (LPMI)

Lender pays PMI in exchange for higher interest rate
No separate PMI payment
Cannot be removed—rate stays higher for loan life
Built into your interest rate

Good for: Borrowers who want lower payment but plan to refinance or sell within a few years.

Example: Instead of 6.5% rate plus $180 PMI, you get 6.875% rate with no PMI. Monthly payment might be similar, but you can’t remove the higher rate later.

How Much Is PMI on FHA Loans?

People often confuse PMI with FHA mortgage insurance premium (MIP). Here’s the FHA PMI chart comparison.

Feature	PMI (Conventional)	MIP (FHA)
Required when	Less than 20% down	Always required
Upfront premium	Usually none	1.75% of loan
Annual rate	0.3-1.5%	0.55% typically
Can be removed	Yes, at 20% equity	Only with 10%+ down (after 11 years)
Duration	Until 20-22% equity	Life of loan (with < 10% down)

Key difference: PMI goes away at 20% equity. FHA MIP typically lasts the entire loan term, which is why many FHA borrowers refinance to conventional once they build equity.

PMI Removal Calculator: How to Get Rid of PMI

Getting rid of PMI saves hundreds per month. Here’s how to calculate when you can remove it.

Automatic Termination

Lenders must automatically cancel PMI when your loan balance reaches 78% of the original purchase price, based on your amortization schedule.

Example:

Purchase price: $350,000
Original loan: $332,500 (5% down)
PMI terminates at: $273,000 balance (78% of purchase price)
Estimated time: 8-10 years with normal payments

Request PMI Cancellation at 80% Equity

You can request PMI removal when you reach 20% equity. You’ll need:

Written request to your servicer
Good payment history (current, no 30-day lates in past year)
Proof of no junior liens
Possibly a new appraisal

Timeline: Request cancellation when your balance reaches 80% of original value.

Remove PMI Early Through Home Appreciation

If your home has appreciated, you may remove PMI sooner:

At 75% LTV (25% equity): Request cancellation with new appraisal. Many lenders allow this after 2 years.

At 80% LTV (20% equity): Request cancellation with new appraisal. Most lenders allow this after 2 years.

Jennifer Martinez bought for $280,000 with 5% down in 2022. By 2024, her home appraised at $340,000. Despite only paying down $8,000, her LTV dropped to 80% based on new value. She removed PMI, saving $165/month.

Refinance Your Mortgage to Eliminate PMI

If you have 20%+ equity but your lender won’t remove PMI, refinancing eliminates it. Compare:

Cost of refinance ($3,000-$6,000 typical)
Monthly PMI savings
Break-even period

Example:

Current PMI: $200/month
Refinance cost: $4,000
Break-even: 20 months

If you’ll stay longer than 20 months, refinancing makes sense.

Make Extra Payments

Pay down principal faster to reach 20% equity sooner.

Strategies:

Round up payments ($1,432 → $1,500)
Make biweekly payments (26 half-payments = 13 monthly payments)
Apply bonuses or tax refunds to principal
One extra payment per year

Impact: On a $300,000 loan at 6.5%, one extra payment per year eliminates PMI roughly 18 months earlier.

Is Paying PMI Worth It?

PMI lets you buy sooner with less down. Whether it’s worth it depends on your situation.

When Private Mortgage Insurance Makes Sense

Home prices rising: If prices increase 5% per year, waiting to save 20% means you’re chasing a moving target. The home that costs $350,000 today costs $367,500 next year.

Rent is expensive: If rent equals or exceeds a mortgage payment (including PMI), you’re building equity instead of paying a landlord.

You can remove it quickly: If you expect appreciation or can make extra payments, PMI is temporary.

Low PMI rates: With good credit and 10-15% down, PMI might only be $80-$100/month.

When to Avoid PMI

You’re close to 20%: If you have 18% saved, wait a few months and avoid PMI entirely.

High PMI rates: With lower credit, PMI can exceed $300/month. That’s $3,600+ per year.

You can get help: Down payment assistance, gifts from family or employer programs might get you to 20%.

The Math: PMI vs. Waiting

Scenario: $350,000 home, 6.5% rate

Option	5% Down Now	Wait and Save 20%
Down payment	$17,500	$70,000
Loan amount	$332,500	$280,000
Monthly P&I	$2,102	$1,770
Monthly PMI	$165	$0
Total payment	$2,267	$1,770

Waiting saves $497/month. But you need $52,500 more for down payment. At $1,000/month savings, that’s 4+ years of waiting—during which home prices may rise 15-20%.

PMI Alternatives

Several strategies avoid PMI without 20% down.

Piggyback Loans (80-10-10)

Take two loans: 80% first mortgage (no PMI) plus 10% second mortgage (usually HELOC), then 10% down payment.

Pros:

No PMI
Second mortgage interest may be deductible
Lower combined payment sometimes

Cons:

Harder to qualify for two loans
Second mortgage has higher rate
More complex to manage

VA Loans

Veterans and military members get zero-down loans with no PMI. The funding fee (2.15% first use) is lower than years of PMI.

USDA Loans

Rural buyers can get zero-down loans. Annual guarantee fee (0.35%) is lower than typical PMI.

Lender-Paid PMI

Accept a higher rate instead of monthly PMI. Good if you’ll refinance or sell within a few years.

Down Payment Assistance

Many programs provide grants or forgivable loans to help reach 20% down. Check your state housing finance agency.

Frequently Asked Questions

How long do you pay PMI?

Until you reach 20% equity (by requesting removal) or 22% equity (automatic removal). This typically takes 5-10 years with normal payments, depending on your down payment size and loan term.

Can you avoid PMI with 10% down?

No—PMI is required with any conventional loan under 20% down. However, PMI rates are lower with 10% down than 5% down. You can also explore piggyback loans or lender-paid PMI as alternatives.

Is PMI tax deductible?

The PMI tax deduction has expired and been renewed multiple times. Check current tax law or consult a tax professional. When available, deductibility phases out at higher income levels.

Does PMI go toward your mortgage?

No. PMI protects the lender, not you. It doesn’t reduce your loan balance, build equity or benefit you directly. It simply allows you to get a loan with less than 20% down.

What happens to PMI if I refinance?

When you refinance, the old PMI ends. If your new loan has less than 20% equity, you’ll need new PMI. If you’ve reached 20% equity, you won’t need PMI on the new loan.

Can I deduct PMI on my taxes?

The PMI deduction has been inconsistent—expiring and being renewed by Congress. Check with a tax professional for current rules. When available, it phases out for incomes above $100,000.

Why is my PMI so high?

PMI is higher when you have: lower credit score, smaller down payment, adjustable-rate mortgage, or high loan amount. Improving your credit before buying can significantly reduce PMI costs.