What is Private Mortgage Insurance (PMI)?

PMI is an insurance policy that protects mortgage lenders if a borrower defaults on a conventional loan, typically required when the down payment is less than 20% of the home's purchase price. It is paid by the borrower.

How much does PMI cost?

PMI typically costs between 0.3% and 1.5% of the original loan amount annually. For example, on a $300,000 loan, a 0.5% PMI rate would add about $125 per month to your mortgage payment.

Can I avoid paying PMI?

Yes, you can avoid PMI by making a down payment of 20% or more, using a VA or USDA loan, or exploring "no-PMI" loan options where the cost is built into a higher interest rate.

When can I cancel PMI?

You can request PMI cancellation once your loan-to-value (LTV) ratio reaches 80% of your home's original appraised value. Your lender is legally required to automatically cancel it once your LTV reaches 78% based on the original amortization schedule.

Is PMI tax-deductible in 2026?

No, as of April 2026, the tax deductibility of Private Mortgage Insurance premiums has expired and has not been renewed for the 2022, 2023, 2024, 2025, or 2026 tax years.

What is the difference between PMI and FHA MIP?

PMI is for conventional loans and can be canceled once sufficient equity is built. FHA MIP (Mortgage Insurance Premium) is for FHA loans and includes an upfront fee plus an annual premium, which for most FHA loans, lasts for the entire life of the loan.

Do I need an appraisal to cancel PMI?

Often, yes. For borrower-initiated cancellation, your lender may require a new appraisal, paid for by you, to confirm your home's current market value and ensure your loan-to-value ratio is 80% or less.

PMI: Your Complete Guide to Private Mortgage Insurance |…