Private Mortgage Insurance (PMI) is a standard insurance policy required by conventional lenders when a borrower places a down payment under 20% of the home's purchase price. PMI protects the lender if you default on your mortgage payments—it does not protect the borrower.
Average PMI Costs Table
PMI premiums are calculated based on your credit score and Loan-to-Value (LVR) ratio. Compare average annual premium estimates below:
| Credit Score Range | LVR: 95% (5% Down) | LVR: 90% (10% Down) | LVR: 85% (15% Down) |
|---|---|---|---|
| 760+ (Excellent) | 0.55% | 0.38% | 0.25% |
| 700 - 759 (Good) | 0.85% | 0.62% | 0.40% |
| 660 - 699 (Fair) | 1.15% | 0.85% | 0.58% |
| 620 - 659 (Substandard) | 1.50% | 1.10% | 0.85% |
How to Cancel PMI
You do not have to pay PMI for the entire life of your mortgage. Under the federal Homeowners Protection Act, you have legal rights to cancel PMI:
- Request Cancellation: You can submit a written cancellation request once your loan balance reaches 80% of the original purchase value, provided you have a clean payment history.
- Automatic Termination: Lenders must cancel PMI once the loan principal balance is scheduled to reach 78% of the original purchase value.
- New Appraisal: If your home's market value increases due to local appreciation or home improvements, you can request a new appraisal to prove your loan-to-value ratio has dropped below 80%.
🔗 SILO Links: Calculate your monthly PITI with PMI using our Mortgage Payment Calculator or examine country-specific limits on the US Mortgage rates page.