# Private mortgage insurance (PMI) explained

> How PMI is priced, borrower-paid vs lender-paid PMI, the 80% and 78% cancellation rules with a worked example, and how FHA mortgage insurance differs.

URL: https://mortgage-math-us.com/buying/pmi/  
Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team

## Quick answer

PMI is insurance that a conventional lender requires when you put less than 20% down. Freddie Mac puts the typical cost at $30–$70 a month for every $100,000 borrowed. You can ask to cancel it once your balance is scheduled to reach 80% of the home’s original value, and it must end automatically at 78%. On a $360,000 home bought with 10% down at 7.24%, that is after **8 years, 7 months** and **9 years, 10 months** of payments.

## Key facts

| Fact | Value | Source | As of |
|---|---|---|---|
| Typical PMI, low end (Freddie Mac) | $30 per $100k a month | [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) | Oct 28, 2026 |
| Typical PMI, high end (Freddie Mac) | $70 per $100k a month | [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) | Oct 28, 2026 |
| Ask your servicer to cancel at this share of original value | 80% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) | Oct 28, 2026 |
| PMI ends automatically at this share of original value | 78% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) | Oct 28, 2026 |
| FHA annual MIP with under 5% down (for comparison) | 0.55% | [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) | Feb 22, 2023 |

## What PMI is

Private mortgage insurance covers the lender, not you, if you stop paying. Conventional loans backed by Fannie Mae and Freddie Mac need it whenever the loan is more than 80% of the home’s value, which is why it comes with any down payment under 20%. You pay the premium; the lender is the beneficiary.

Other loans handle the same risk differently. FHA loans charge their own mortgage insurance premium (MIP), VA loans have no mortgage insurance but may charge a one-time funding fee, and USDA loans charge guarantee fees. This guide is about conventional PMI; the [buying a home hub](https://mortgage-math-us.com/buying/) covers the rest of the purchase.

## What PMI costs

Insurers price PMI mainly on your down payment and credit score; the loan term and the amount of coverage the loan requires also play a part. Freddie Mac’s consumer site gives a typical range of $30–$70 a month per $100,000 borrowed.

*Monthly PMI across Freddie Mac’s typical range*

| Loan amount | Low end | Midpoint | High end |
|---|---:|---:|---:|
| $200,000 | $60 | $100 | $140 |
| $300,000 | $90 | $150 | $210 |
| $400,000 | $120 | $200 | $280 |
| $500,000 | $150 | $250 | $350 |

Your Loan Estimate shows the actual premium on page 1 under projected payments. Because credit score moves you within the range, a few points of improvement before you apply can pay off every month — see [credit score for a mortgage](https://mortgage-math-us.com/buying/credit-score/).

## Ways to pay for it

*PMI payment options*

| Type | How you pay | Cancellable? |
|---|---|---|
| Borrower-paid, monthly | A premium added to each mortgage payment — the most common option | Yes, under the rules below |
| Single premium | One upfront payment at closing | Ask whether any part is refundable if you sell or refinance early |
| Split premium | A smaller upfront payment plus a lower monthly premium | The monthly part follows the rules below |
| Lender-paid | No separate premium; you accept a higher interest rate instead | No — the higher rate stays unless you refinance |

The CFPB notes that loans with small down payments and no PMI usually carry a higher interest rate. Lender-paid coverage can make sense if you expect to move or refinance before borrower-paid PMI would have ended; otherwise you may pay for it long after PMI would have come off. Upfront premiums appear in the closing costs on your [Loan Estimate](https://mortgage-math-us.com/buying/loan-estimate/).

## When PMI ends: the three rules

> **Rule: The Homeowners Protection Act**
>
> - **On request at 80%.** You can ask in writing to cancel PMI when your balance is scheduled to reach 80% of the original value — or earlier if extra payments get you there. You need a good payment history, no second mortgage or other junior lien, and you may have to show, for example with an appraisal, that the home hasn’t lost value.
> - **Automatically at 78%.** The servicer must end PMI on the date the balance is scheduled to reach 78% of the original value, if you are current on payments.
> - **At the midpoint.** Even if neither balance is reached, PMI must end the month after the loan reaches the midpoint of its schedule — halfway through the original term — if you are current.

“Original value” generally means the lower of the purchase price and the appraised value when you bought. These rules cover single-family homes you live in, financed on or after July 29, 1999. Your PMI disclosure form, received with your mortgage, shows the first date you can ask.

## Worked example: when PMI comes off

> **Worked example: $360,000 home, 10% down ($324,000 loan), 30-year fixed at the 7.24% weekly average, PMI at $162 a month**
>
> | Milestone | Balance | Reached after | PMI paid to then |
> |---|---:|---:|---:|
> | Ask to cancel (80% of original value) | $287,980 | 8 years, 7 months | $16,686 |
> | Ends automatically (78%) | $280,615 | 9 years, 10 months | $19,116 |
> | Final termination (month after the midpoint) | — | 15 years, 1 month | — |
> | Ask to cancel, paying $200 extra each month | — | 5 years, 6 months | $10,692 |
> 
> PMI uses the midpoint of Freddie Mac’s range. At this rate the balance reaches 78% long before the midpoint, so the final-termination rule only matters on loans with very small down payments, high rates or interest-only periods.

The last row is the cheapest lever most buyers have: extra principal moves the date you can ask for cancellation, while the automatic date stays tied to the original schedule. Our [extra payment calculator](https://mortgage-math-us.com/tools/extra-payment-calculator/) shows the full schedule for your own loan.

Home values can help too. Fannie Mae and Freddie Mac servicers can cancel PMI based on a new appraisal once you have owned the home for some years and the balance is low enough against today’s value; ask your servicer for its requirements. Another route is to [refinance to remove PMI](https://mortgage-math-us.com/refinancing/refinance-to-remove-pmi/), which only makes sense if the new rate and costs work on their own.

## PMI vs FHA mortgage insurance

*Conventional PMI and FHA MIP compared*

| | Conventional PMI | FHA MIP |
|---|---|---|
| Upfront charge | None with monthly PMI | 1.75% of the base loan, usually financed |
| Annual cost | About $30–$70 a month per $100,000 | 0.5%–0.55% a year on most 30-year loans |
| Priced on credit score | Yes | No — set by HUD by loan size, term and down payment |
| When it ends | 80% on request, 78% automatically | 11 years with 10% or more down; otherwise the life of the loan |

On a $360,000 home with 3.5% down, FHA’s 0.55% annual premium costs about $159 a month and doesn’t cancel. That is why buyers with good credit usually come out ahead with PMI, while lower scores can tip the balance toward FHA. The [FHA loans guide](https://mortgage-math-us.com/loan-types/fha-loans/) runs the full comparison, and the [down payment guide](https://mortgage-math-us.com/buying/down-payment/) shows how long PMI lasts at each down payment.

## Is PMI tax-deductible?

The IRS’s draft Publication 936 for 2026 says the itemized deduction for qualified mortgage insurance premiums — PMI, FHA and USDA premiums and VA funding fees — has been reinstated for tax year 2026. It phases out once adjusted gross income passes $100,000, and you only benefit if you itemize. Check the final publication before you file.

## Frequently asked questions

### How much is PMI a month?

Freddie Mac puts it at about $30–$70 a month for every $100,000 borrowed. On a $324,000 loan that is roughly $97 to $227 a month, depending mostly on your credit score and down payment.

### When does PMI go away?

You can ask your servicer to cancel it once your balance is scheduled to reach 80% of the home’s original value, and it must end automatically at 78% if you are current. On a $360,000 home with 10% down at 7.24%, that takes about 8 years, 7 months and 9 years, 10 months.

### Can I remove PMI if my home has gone up in value?

Often, yes, but on your servicer’s terms rather than under the federal schedule. Fannie Mae and Freddie Mac servicers can cancel PMI based on a new appraisal once the loan has been in place for some years and the balance is low enough against the current value. Ask your servicer what it requires.

### Is lender-paid PMI a good idea?

It replaces the monthly premium with a higher interest rate that lasts for the life of the loan. It can work if you expect to sell or refinance within a few years; if you keep the loan longer, borrower-paid PMI that you can cancel usually costs less.

### Do FHA loans have PMI?

No — they have their own mortgage insurance premium. FHA charges 1.75% upfront plus annual MIP, and with less than 10% down the annual premium lasts for the life of the loan.

### Do VA loans require PMI?

No. VA loans have no monthly mortgage insurance, but a one-time funding fee may apply — 2.15% of the loan on first use with less than 5% down.

### Is PMI tax-deductible?

For tax year 2026, the IRS draft Publication 936 says the deduction for mortgage insurance premiums is back for people who itemize, phasing out above an adjusted gross income of $100,000. Confirm with the final publication.

## Sources

- [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026)
- [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year)
- [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026)
- [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) — Ask your servicer to cancel PMI at this share of original value; PMI ends automatically at this share of original value; PMI must end the month after the loan reaches the midpoint of its schedule (Oct 28, 2026)
- [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) — FHA annual MIP, 30-year loan, more than 95% LTV; FHA upfront mortgage insurance premium; FHA annual MIP, 30-year loan, 95% LTV or less (Feb 22, 2023)
- [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum FHA down payment (Oct 28, 2026)
- [IRS draft Publication 936 (2026)](https://www.irs.gov/pub/irs-dft/p936--dft.pdf) — Mortgage insurance premium deduction starts phasing out above this AGI (2026) (Tax year 2026)
- [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) — VA funding fee, first use, less than 5% down (Apr 7, 2023)
- [CFPB: What is private mortgage insurance?](https://www.consumerfinance.gov/ask-cfpb/what-is-private-mortgage-insurance-en-122/)

_General information, not financial advice._