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Costs & insurance

Private mortgage insurance (PMI)

Abbreviation: PMI

Definition

Private mortgage insurance (PMI) protects the lender on a conventional loan when the borrower puts down less than 20%. It is usually added to the monthly payment and priced by the insurer based on credit score and loan-to-value. PMI can be removed once the loan reaches 80% of the original value, and ends automatically at 78%.

Private mortgage insurance (PMI), explained

CalcFunnel’s US defaults use 0.55% a year of the loan as an indicative PMI rate; actual premiums vary with credit and down payment.

FHA loans use a different product, mortgage insurance premium (MIP), with different rules.

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The PMI Calculator shows how this works with real numbers. See your monthly private mortgage insurance and when it drops off the loan.

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Related terms

FAQ

PMI: quick questions

Still stuck? Ask the team — we reply within one business day.

Q.01What is PMI (Private mortgage insurance)?
Private mortgage insurance (PMI) protects the lender on a conventional loan when the borrower puts down less than 20%. It is usually added to the monthly payment and priced by the insurer based on credit score and loan-to-value. PMI can be removed once the loan reaches 80% of the original value, and ends automatically at 78%.
Q.02When does PMI go away?
You can request cancellation at 80% loan-to-value based on the original value; it must end automatically at 78% if payments are current.
Q.03Is PMI the same as FHA MIP?
No. PMI applies to conventional loans; MIP is FHA’s own insurance with an upfront premium and different removal rules.

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