What Is Private Mortgage Insurance (PMI), and How Can I Avoid It
- By Jim Blackburn
- on
- 100 first time home buyer FAQs
1. What Is PMI, and When Do You Pay It?
Private Mortgage Insurance (PMI) is a monthly cost added to your mortgage payment when you:
- Put down less than 20% on a conventional loan
- Have a higher-risk loan profile from the lender’s point of view
PMI doesn’t protect you—it protects the lender in case you default. It usually adds 0.3% to 1.5% of the loan amount annually, so avoiding it can save you hundreds each month.
2. How Can You Avoid PMI Altogether?
If you want to skip PMI from the start, consider:
- Saving 20% down before buying
- A piggyback loan (80/10/10 loan structure)
- Lender-paid PMI, where the lender covers the cost in exchange for a slightly higher interest rate
- VA loans, which don’t require PMI at all for eligible veterans
Don’t assume you’re stuck with it—ask your lender for creative options based on your credit and goals.
3. Can You Remove PMI After You Buy? Absolutely.
Once you’ve built 20% equity through payments or home appreciation, you can usually request to cancel PMI. By law, PMI must automatically fall off when you hit 22% equity. Just be sure to:
- Track your loan balance
- Keep an eye on rising property values
- Reach out to your lender with a formal request (sometimes an appraisal is needed)
PMI doesn’t have to be forever—you just need a plan.
Want Help Avoiding or Removing PMI? Let’s Build a Smart Strategy
Download our free “First-Time Buyer Game Plan” eBook — includes a full PMI breakdown and removal checklist
Chat live now to explore low-down-payment options with no PMI
Schedule a call with a Stairway Mortgage advisor to compare loan types and find the path that fits your goals
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