What Is PMI and Do I Need It?
- By Jim Blackburn
- on
- 100 first time home buyer FAQs
The Truth About Private Mortgage Insurance (and How to Make It Work for You)
PMI Sounds Scary—But It Might Be Your Ticket In
If you’ve heard of PMI and thought, “Ugh, one more fee?”—you’re not alone. Private Mortgage Insurance can feel like a mystery charge when you’re already juggling numbers. But here’s the truth: it might actually be the key to getting into your first home sooner—and it’s not forever.Here’s what you need to know in three simple steps:
1. PMI Protects the Lender—Not You Private Mortgage Insurance (PMI)
is required when you put less than 20% down on a conventional loan. It’s there to protect the lender, not the buyer, in case the loan isn’t repaid. So yes, it’s an extra cost—but it also opens the door to homeownership with less money upfront.
Calculate what PMI costs on your specific loan with our FHA Purchase Loan calculator (which has MIP instead of PMI) or Conventional Purchase Loan calculator to see the real monthly impact.
2. You’ll Pay PMI Monthly (But It’s Manageable)
PMI is usually rolled into your monthly mortgage payment and based on a percentage of your loan amount—typically 0.3% to 1.5% annually. It’s not a massive amount, but it’s important to factor it into your total monthly housing costs so there are no surprises.
See your complete monthly payment including PMI with our Conventional Purchase Loan calculator, or explore 0% down options with our VA Purchase Loan calculator if you’re military or a veteran.
You Can Cancel PMI Once You Hit 20% Equity
The good news? PMI doesn’t last forever. Once you’ve paid down enough of your mortgage to reach 20% equity, you can usually request to have it removed. Some loans even cancel it automatically at that point. So while it’s part of the journey, it’s not a lifelong commitment.
Learn about all your low down payment options and when PMI ends at our buy a house page to understand the complete picture of homeownership costs.
Want to Understand PMI and Your Real Monthly Costs?
PMI opens doors to homeownership with less money down. Here’s how to see the complete picture:
💰 Calculate PMI costs with our Conventional Purchase Loan calculator for 3-5% down scenarios
🏡 Compare to FHA options using our FHA Purchase Loan calculator which has MIP instead
🎖️ Avoid PMI entirely with our VA Purchase Loan if you qualify for 0% down
⚡ Get personalized breakdown with same-day approval
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