PMI Explained: How Long You Pay It, How to Remove It, and How to Avoid It
On a conventional loan, PMI typically cancels itself no later than 9–11 years in — sooner if you request removal the moment you hit 80% loan-to-value, which most homeowners are eligible to do years before it happens automatically. FHA loans work differently: MIP lasts for the life of the loan unless your down payment was 10%+ (11 years) or you refinance out of it entirely.
Federal law — the Homeowners Protection Act — gives conventional-loan borrowers two ways off PMI: ask for it once your loan balance hits 80% of your home's original value, or wait for it to cancel automatically at 78%, or at the midpoint of your loan term, whichever comes first. On a typical 30-year loan with 10% down, that's roughly 8 years if you ask, or 9–11 years if you don't. FHA's MIP doesn't follow either rule — it's life-of-loan on most low-down-payment FHA mortgages, and refinancing is usually the only real exit.
What PMI actually is
Private mortgage insurance protects your lender, not you — it's the trade-off for borrowing more than 80% of a home's value on a conventional loan. You pay it monthly, rolled into your mortgage payment, until one of the removal paths below kicks in. The annual cost typically runs 0.46% to 1.50% of your loan amount, and credit score is the single biggest factor:
| Credit score | Typical annual PMI rate |
|---|---|
| 760+ | 0.46% |
| 740–759 | 0.58% |
| 720–739 | 0.70% |
| 680–699 | 0.98% |
| 620–639 | 1.50% |
A borrower with a 620 score can pay more than 3× what a borrower with a 760 score pays for the identical loan — one more reason a credit-score push before you apply is often worth more than shopping ten different lenders.
How to remove PMI on a conventional loan
There are three ways PMI comes off a conventional mortgage, and only one requires you to do anything:
- Borrower-requested cancellation at 80% LTV. Once your loan balance drops to 80% of your home's original purchase price, you can request cancellation in writing — as long as you've had no payment 30+ days late in the past 12 months, and none 60+ days late in the past 24 months. If you meet both, the servicer is required to cancel it.
- Automatic termination at 78% LTV. If you never ask, your servicer must cancel PMI automatically once your balance reaches 78% of the original value, as long as you're current on payments. No letter required — but you'll pay PMI for however many extra months it takes to get there.
- Final termination at the loan's midpoint. A backstop for slower-amortizing loans: PMI must terminate at the halfway point of your loan term regardless of LTV. On a 30-year loan, that's year 15, month 180.
Worked example: $300,000 home, 10% down, conventional loan
At a 6.66% 30-year fixed rate on a $270,000 loan, here's what PMI actually costs before it's gone — and how much waiting for automatic termination instead of requesting removal costs you:
| Credit tier | Request at 80% LTV (~8.1 yrs) | Wait for auto-termination (~9.2 yrs) |
|---|---|---|
| Excellent (760+) — 0.46%/yr | $10,040 | $11,488 |
| Good (720–739) — 0.70%/yr | $15,278 | $17,482 |
| Fair (680–699) — 0.98%/yr | $21,388 | $24,476 |
| Lower (620–639) — 1.50%/yr | $32,738 | $37,462 |
Total PMI paid, each column. Rate: 6.66% (Freddie Mac, week of Aug. 27, 2026). Run your own loan through the home affordability calculator.
The gap between the two columns — roughly $1,400 to $4,700, depending on credit tier — is simply the cost of not sending one letter on time. Mark your calendar for month 97, not month 111.
FHA loans use MIP, not PMI — and the rules are stricter
FHA borrowers pay an upfront MIP of 1.75% of the loan amount at closing, plus an annual MIP of about 0.55%. Removal depends entirely on down payment size, for loans originated after June 2013:
- Less than 10% down: MIP lasts for the life of the loan. The only way off is refinancing.
- 10% or more down: MIP can be removed after 11 years.
For the large majority of FHA borrowers who put down the minimum 3.5%, MIP doesn't go away on its own — ever. The realistic path off it is refinancing into a conventional loan once you have at least 20% equity and qualify on credit (typically 620+) and DTI (usually under 50%).
Ways to avoid paying PMI in the first place
- Put down 20% or more — no PMI is charged above this threshold.
- A piggyback loan (80-10-10) — finance 80% with a first mortgage, 10% with a second, and put 10% down, though the second loan usually carries a higher rate.
- Lender-paid PMI (LPMI) — your lender covers the cost in exchange for a slightly higher rate for the life of the loan; it never cancels.
- A VA loan, if you qualify — no mortgage insurance at all, regardless of down payment.
- Single-premium PMI — pay the entire cost upfront instead of monthly.
- Negotiate the purchase price down — even a small amount lowers your LTV and how long PMI sticks around.
When paying PMI actually makes sense
Avoiding PMI isn't automatically the right move. Getting into the market sooner beats years of rent and lost appreciation; keeping cash reserves intact matters more than hitting 20% down; and — starting with tax year 2026 — mortgage insurance premiums are deductible again for filers with adjusted gross income under $100,000, phasing out by $110,000, a meaningful offset that wasn't available between 2022 and 2025.
Frequently asked questions
Can I ask my lender to remove PMI before I hit 80% LTV?
Not under the federal automatic-cancellation right, but many lenders will consider it case-by-case, especially with a new appraisal showing higher home value. It's a request, not a guarantee, before you cross the standard threshold.
Does refinancing reset my PMI clock?
Yes — a new loan starts its own LTV calculation from the new balance and new home value, which can work for or against you depending on how much equity and appreciation you've built since your original purchase.
Is PMI the same as homeowners insurance?
No. Homeowners insurance protects you and your property; PMI protects your lender if you default. They're both often collected in the same monthly payment, which is where the confusion usually starts.
Do I need a new appraisal to cancel PMI at 80%?
Not for the standard federal cancellation right, which uses your original purchase price. A new appraisal only matters if you're trying to prove you've hit 80% faster than your payment schedule alone would show.
Sources: CFPB — Homeowners Protection Act procedures · Bankrate — Basics of PMI · The Mortgage Reports — Removing FHA MIP · NerdWallet — PMI calculator · USMI — Mortgage insurance tax deductibility
This is an estimate for educational purposes only. HowAffordable is not a lender and does not provide financial, legal, or tax advice — confirm your specific PMI/MIP terms with your loan servicer, and consult a tax professional about the deduction. See our methodology for full assumptions.