Private Mortgage Insurance (PMI) is a standard requirement set by conventional lenders for mortgages carrying a down payment under 20%. While PMI protects the lender, it adds to your monthly payments.
How Much Does PMI Cost?
PMI is calculated as a percentage of the total loan amount, typically ranging from 0.5% to 1.5% annually. For a $300,000 home loan with a 5% down payment, a 1% PMI rate will add approximately $237 to your monthly payment.
PMI Payment Surcharge Calculator
Est. Payment (including ~0.7% PMI):
$1,865
How to Eliminate PMI Fast
Under conventional lending guidelines (specifically the Homeowners Protection Act), you can remove PMI using these strategies:
- Automatic Termination: The lender must cancel PMI once the loan principal balance is scheduled to reach 78% of the original home purchase value.
- Request Cancellation: You can submit a written cancellation request once your loan balance reaches 80% of the original purchase value.
- Reappraisal: If home values in your neighborhood have risen significantly, you can pay for a new appraisal to prove your Loan-to-Value (LVR) is now below 80%.
🔗 SILO Links: Model full PMI scenarios using our Mortgage Payment Calculator or read our Private Mortgage Insurance Guide.