What Is PMI, and How Do You Get Rid of It?
Private mortgage insurance, or PMI, is one of the most misunderstood lines on a mortgage payment. It is not a penalty and it is not permanent — it is simply what lets you buy sooner with less than 20% down. Here is what PMI is, when it applies, and how to get rid of it.
By Jodie Barber, NMLS #76185 · 5 min read · Updated July 2026
- ✦PMI applies to conventional loans when you put less than 20% down.
- ✦You can request PMI removal at 80% LTV; it cancels automatically at 78%.
- ✦PMI protects the lender but lets you buy sooner with less down.
- ✦FHA's MIP often lasts the life of the loan — refinancing is the usual way out.
What PMI actually is
PMI is insurance that protects the lender if a borrower stops making payments. It applies to conventional loans when your down payment is less than 20% of the home's value.
It is worth being clear about who it protects: PMI covers the lender, not you. What it does for you is open the door to homeownership without waiting years to save a full 20% down. For many buyers, that trade is well worth it.
When PMI applies — and what it costs
You will typically see PMI on a conventional loan any time you put down less than 20%. The cost is based on factors like your loan-to-value ratio and credit, and it is usually added to your monthly payment.
Because it is tied to how much equity you have, PMI is temporary by design. As your loan balance shrinks and your equity grows, you move steadily toward being able to remove it.
How to get rid of PMI: 80% and 78%
There are two key thresholds, both based on loan-to-value (LTV) — your loan balance compared to the home's value:
- ✦At 80% LTV (20% equity), you can request that PMI be removed. This puts you in the driver's seat as you pay the balance down.
- ✦At 78% LTV, the servicer must cancel PMI automatically, as long as you are current on payments.
- ✦Rising home values or extra principal payments can get you to these thresholds faster — an appraisal may be required to document the value.
How FHA's MIP is different
FHA loans carry a mortgage insurance premium (MIP) instead of PMI, and the rules are not the same. On most modern FHA loans with a low down payment, MIP stays for the life of the loan.
That is a big long-term difference. With conventional PMI you have a built-in exit at 80% and 78% LTV. With FHA, the common way to shed mortgage insurance is to refinance out of the FHA loan once you have enough equity and credit to qualify for conventional financing.
The bottom line on PMI
PMI is not something to fear. It is a temporary cost that lets you buy now rather than later, and it comes with a clear, predictable off-ramp. If you would like to know when your loan is likely to hit 80% or 78% LTV, Jodie can run the numbers with you.
Frequently asked questions
- At what point does PMI go away?
- You can request removal once you reach 80% loan-to-value, and it cancels automatically at 78%, as long as you are current on payments.
- Can I avoid PMI without putting 20% down?
- Sometimes. Options like paying the balance down faster or a loan structured to avoid PMI may fit certain buyers. The clearest path for most is reaching 20% equity, at which point PMI can be removed.
- Is PMI the same as FHA mortgage insurance?
- No. PMI is on conventional loans and ends at 80% and 78% LTV. FHA charges MIP, which on most low-down-payment FHA loans lasts the life of the loan.
- Does paying extra principal help me drop PMI faster?
- Yes. Extra principal lowers your loan-to-value more quickly, moving you toward the 80% and 78% thresholds sooner. An appraisal may be needed to document the home's value.
Keep reading
What it takes to qualify for a conventional loan in 2026 — credit, down payment, DTI, PMI, and the new conforming loan limits — explained in plain English.
FHA and conventional loans both help you buy with less than 20% down. Here's how they compare in 2026 on credit, down payment, mortgage insurance, and total cost.
A jumbo loan is a mortgage above the conforming limit. Here's when you need one in 2026, the $832,750 and $1,249,125 thresholds, and what lenders expect.