What Is PMI and How Do You Remove It? (2026)

Why lenders charge it and what it costs

A smaller down payment means the lender has more to lose if the loan goes bad, so on conventional loans they require PMI until you have a 20 percent equity cushion. The premium is set by your loan size, down payment, and credit score.

Worked example: PMI at 0.7 percent a year

Loan amount$300,000
PMI rate (annual)0.7 percent
Annual PMI cost$2,100
Added to the monthly payment$175 / mo

That 175 dollars a month buys you nothing you keep. It is pure cost, which is why removing it early is worth real money.

How to remove PMI

On a conventional loan you have several routes, from most automatic to most active:

Automatic termination. By law the lender must cancel PMI when your balance reaches 78 percent of the original home value, as long as you are current on payments.
Request at 80 percent. You can ask in writing to cancel PMI once you reach 20 percent equity based on the original value, rather than waiting for 78 percent.
Pay down faster. Extra principal payments get you to the 20 percent line sooner. This is the lever you control.
Reappraise after a rise in value. If your home has appreciated or you have improved it, a new appraisal may show 20 percent equity even before you have paid the balance down that far.

PMI is not the same as FHA mortgage insurance

Government backed FHA loans carry their own mortgage insurance premium (MIP), and on most modern FHA loans MIP lasts for the life of the loan and cannot simply be cancelled at 20 percent equity. The common way out is to refinance into a conventional loan once you have enough equity. If avoiding lifetime insurance matters to you, factor that into the FHA versus conventional decision up front.

Frequently asked questions

Do I get PMI back when I sell?

No. PMI is an insurance premium that protects the lender, not a deposit or equity. Once paid it is gone, which is why cancelling it as early as possible is worthwhile.

How much down payment avoids PMI entirely?

On a conventional loan, 20 percent of the purchase price. Put down 20 percent or more and no PMI is charged from the start.

Can extra payments really cancel PMI early?

Yes. PMI cancellation is tied to your balance relative to the original value. Every extra dollar of principal moves you toward the 20 percent equity line sooner, so extra payments can end PMI months or years early.

Is PMI tax deductible?

The deduction for mortgage insurance premiums has expired and been reinstated several times, so treat it as uncertain and check the current year rules or a tax professional before relying on it.