PMI Explained: When Can You Remove It?

Published Apr 13, 2026 · 6 min read

Private mortgage insurance (PMI) is required when your down payment is less than 20%. It protects the lender, not you. Here's how it works and when you can drop it.

How Much Does PMI Cost?

Typically 0.5% to 1.5% of the loan amount per year. On a $300,000 loan, that's $125-$375/month. The exact rate depends on your credit score, LTV ratio, and loan type.

When PMI Goes Away

• Automatic termination — Lender must cancel when you reach 22% equity based on original value.
• Request removal at 20% — You can write to your lender requesting cancellation once you hit 80% LTV.
• New appraisal — If your home has appreciated significantly, get a new appraisal to prove you've hit 20% equity faster.

Avoiding PMI Altogether

• Save a 20% down payment
• Piggyback loan (80-10-10): 80% first mortgage, 10% second mortgage, 10% down
• Lender-paid PMI (LPMI): higher interest rate, no separate PMI payment
• VA loans: no PMI regardless of down payment