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.
See exactly how PMI affects your monthly payment. Calculate your Conventional Purchase Loan Payment now to compare scenarios with different down payment amounts and see when PMI kicks in and how much it costs.
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.
Veterans can skip PMI entirely with zero down payment. Calculate your VA Purchase Loan Payment now to see how VA financing eliminates PMI while requiring no down payment—a powerful combination for eligible buyers.
If you’re not eligible for VA but need a low down payment option, FHA loans have mortgage insurance but with more flexible qualifying. Calculate your FHA Purchase Loan Payment now to compare FHA’s mortgage insurance costs against conventional PMI.
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.
Track your home’s value to know when you’ve hit 20% equity. Get a Free Home Evaluation to see if appreciation has pushed you over the PMI removal threshold faster than expected.
Want Help Avoiding or Removing PMI? Let’s Build a Smart Strategy
At Stairway Mortgage, we help you climb faster—by eliminating extra costs that slow you down.
📘 Download our homebuyer guides about avoiding PMI.
📊 Check Current Rates for conventional and VA loans.
🧮 Compare PMI scenarios with our Conventional Purchase Calculator.
🏠 Get a Free Home Evaluation to track your equity.
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