PMI in 2026: What Private Mortgage Insurance Costs and How to Remove It

June 29, 2026 · Cost Guide · 6 min read

Private mortgage insurance (PMI) costs 0.5%–1.5% of your loan amount per year — on a $350,000 mortgage, that is $145–$438 per month added to your payment. You pay it when your down payment is less than 20% on a conventional loan. PMI is not permanent: you can request cancellation once your equity reaches 20%, and lenders must remove it automatically at 22% equity. For most buyers, PMI is a known cost of entry into homeownership — and worth understanding precisely before you close.

What PMI Actually Costs in 2026

PMI rates are priced based on your specific risk profile, not a flat rate. The primary factors that determine your rate:

• Loan-to-value ratio (LTV): Lower LTV means lower PMI rate. 5% down triggers higher PMI than 15% down on the same property.
• Credit score: Borrowers with 760+ scores pay the lowest PMI rates. Those below 680 pay significantly more for the same LTV.
• Loan type: Fixed-rate loans have lower PMI rates than adjustable-rate mortgages. 15-year loans have lower PMI than 30-year loans.
• Occupancy: Primary residences have lower PMI rates than investment properties or second homes.

Representative annual PMI rates and monthly costs on a $350,000 loan:

• 5% down, 680–699 credit score: 1.2%–1.5% annually → $350–$438/month
• 5% down, 720–759 credit score: 0.9%–1.1% annually → $263–$321/month
• 5% down, 760+ credit score: 0.6%–0.9% annually → $175–$263/month
• 10% down, 680–699 credit score: 0.9%–1.2% annually → $263–$350/month
• 10% down, 760+ credit score: 0.4%–0.6% annually → $117–$175/month
• 15% down, 760+ credit score: 0.25%–0.40% annually → $73–$117/month

These are estimates based on major mortgage insurer rate tables. Your lender will quote your actual rate before closing — it appears on your Loan Estimate under "mortgage insurance." Your total home purchase cost picture is covered in our first-time homebuyer cost breakdown.

How PMI Is Structured

PMI comes in three payment formats, each with different trade-offs:

Monthly PMI (most common)

Added directly to your monthly mortgage payment. This is the default for most conventional loans. The key advantage: it is cancelable when you reach 20% equity. The disadvantage: it is a real monthly cash outflow — $175–$438 per month depending on loan size and rate — that reduces your purchasing power and budget flexibility until you reach the cancellation threshold.

Single-premium PMI (upfront lump sum)

You pay the entire PMI cost at closing in a lump sum — typically 1.3%–2.0% of the loan amount, or $4,550–$7,000 on a $350,000 loan. Advantage: no monthly burden and slightly better cash flow going forward. Disadvantage: if you sell or refinance within a few years, single-premium PMI is generally not refundable, meaning you overpay relative to what monthly PMI would have cost on a shorter timeline.

Split-premium PMI

A hybrid approach: you pay a reduced upfront premium at closing and a lower ongoing monthly amount. This reduces the monthly payment impact without the full capital outlay of single-premium. It is less commonly offered but worth asking your lender about if minimizing both upfront and monthly costs is a priority.

Lender-Paid PMI: The Rate Trade-Off

Some lenders offer "lender-paid PMI" (LPMI): they cover your PMI in exchange for a higher interest rate — typically 0.25%–0.75% above the standard rate. On a $350,000 loan, an extra 0.5% rate adds $1,750 per year in additional interest, which is similar to paying $146 per month in PMI. The math looks equivalent at first glance, but there is a critical structural difference: LPMI is permanent. Unlike borrower-paid PMI, which you can cancel at 20% equity, LPMI is embedded in your interest rate for the life of the loan. The only way to eliminate it is to refinance, which requires requalification and costs $3,000–$6,000 in closing costs. LPMI makes financial sense primarily if you plan to sell within 5–7 years before reaching 20% equity naturally.

How to Avoid PMI Without 20% Down

VA loans (no PMI for qualifying veterans)

VA loans require no down payment and no PMI for qualifying veterans, active duty service members, and eligible surviving spouses. There is an upfront VA funding fee (1.25%–3.3% of the loan amount depending on service history and whether it is a first or subsequent use), but no ongoing monthly insurance premium. For eligible borrowers, VA loans are almost always the most financially favorable option available. Your real estate agent should ask about eligibility early in the process — this is a significant advantage worth confirming before you start making offers.

USDA loans (rural and eligible suburban areas)

USDA loans offer zero-down financing in eligible areas with no PMI, but they do charge an annual guarantee fee of 0.35% of the remaining loan balance — lower than most PMI rates and a favorable option in qualifying areas.

Piggyback loans (80-10-10 structure)

You put 10% down, take out an 80% first mortgage (no PMI since LTV is exactly 80%), and simultaneously take a 10% home equity loan or HELOC at a higher interest rate. The second loan carries a higher rate, but the total blended cost is often less than PMI — particularly for borrowers who plan to aggressively pay down the second loan. This structure requires qualifying for two loans simultaneously and works best with strong credit profiles.

How to Cancel PMI You Are Already Paying

The federal Homeowners Protection Act (HPA) establishes specific cancellation rights for borrower-paid PMI on conventional loans:

Automatic cancellation at 78% LTV

Once your loan balance reaches 78% of the original purchase price — based on your scheduled amortization, not accelerated payments — your servicer must automatically cancel PMI. You do not need to request it. On a 30-year conventional loan with 5% down, automatic cancellation occurs around year 11–13 depending on your rate and payment history.

Proactive request at 80% LTV

You can request cancellation once your balance reaches 80% of the original purchase price, which saves you 1–2 years versus waiting for automatic cancellation. Requirements: submit a written request to your servicer; demonstrate a good payment history (no 30-day late payments in the past 12 months, no 60-day lates in the past 24 months); allow the lender to verify property value via appraisal if required ($300–$500). Servicers have 30 days to respond.

Refinancing when home value has increased

If your home's market value has risen significantly since purchase, your current equity percentage may already exceed 20% even without substantial principal paydown. A new appraisal would confirm this, and refinancing into a new loan at the current LTV eliminates PMI — and potentially reduces your rate if market rates have improved. The break-even on refinancing costs ($3,000–$6,000) depends on your monthly savings; calculate how many months of PMI savings cover the closing costs before committing.

PMI vs. Waiting to Save 20% Down: The Math

The calculation depends heavily on your specific market. In markets where prices are rising 5–8% annually, a 2-year delay to save a larger down payment often costs more in appreciation missed than you save in avoided PMI. In flat or declining markets, waiting makes more financial sense. Key variables to model:

• How long it realistically takes you to save the additional down payment
• How quickly prices are moving in your target area
• Your current rent versus ownership cost including PMI
• How quickly you could reach 20% equity through payments or appreciation after purchasing

A local agent who knows your target market can help you model this accurately. Find a real estate agent near you who has experience walking buyers through this analysis, or browse by city for agents specializing in your market. Our guides on how much down payment you actually need and getting mortgage pre-approval in 2026 cover the broader financing picture that PMI sits within.