How Much Is PMI?

If you put down less than 20%, your lender will almost certainly charge private mortgage insurance (PMI). It is one of the least understood costs in home buying — money you pay every month that protects the lender, not you. Here is exactly what it costs, how your credit score and down payment change the price, and the fastest ways to get rid of it.

What PMI costs

PMI typically runs 0.5% to 1.5% of the original loan amount per year, paid as a monthly add-on to your payment. On a $300,000 loan, that is $1,500 to $4,500 a year — $125 to $375 a month. On a $400,000 loan, the range is $2,000 to $6,000 a year, or $167 to $500 a month.

Here is what PMI adds at a typical 0.8% rate across common loan sizes:

That money buys you nothing — it is pure insurance for the lender against the risk that you default. The good news: it is temporary, and it disappears once you build enough equity.

How your credit score and down payment change the price

PMI is not a single rate. It is priced on a grid of two factors: your credit score and your down payment. The lower your score and the smaller your down payment, the higher the PMI rate.

• Credit score. A 760+ score with 15% down might pay 0.3% to 0.5%. A 660 score with 3% down could pay 1.3% to 1.5% — three to four times as much.
• Down payment. 15% down costs far less than 3% down at any given score, because you already carry meaningful equity.

A concrete comparison on a $400,000 loan: a 760-score buyer with 15% down might pay around $110 a month in PMI, while a 660-score buyer with 3% down could pay over $450 a month. Same house, same loan size — a $340 monthly difference driven entirely by the PMI pricing grid.

How to avoid PMI

There are several ways to skip PMI entirely:

• Put down 20%. The cleanest way. Twenty percent down removes PMI from day one.
• VA loan. Eligible veterans pay no PMI and no monthly mortgage insurance at all — though there is a one-time VA funding fee.
• Piggyback loan. An 80-10-10 structure: 80% first mortgage, 10% second loan (often a HELOC), 10% down. You avoid PMI by splitting the loan, but the second loan usually carries a higher rate.
• Lender-paid PMI. Some lenders pay the PMI for you in exchange for a slightly higher interest rate. You pay nothing separately, but the higher rate is permanent — often worse than paying PMI that can be cancelled.

Run the numbers before choosing. Lender-paid PMI sounds free but locks in a higher rate for the life of the loan, while conventional PMI can be removed in a few years.

When PMI goes away

By federal law, PMI on conventional loans must cancel automatically when your balance reaches 78% of the original home value (22% equity), based on the scheduled amortization. You can request cancellation earlier — at 80% loan-to-value (20% equity) — once you have a good payment history. If home values have risen, an appraisal-based removal can get you there even faster.

FHA loans work differently: they carry MIP, not PMI, and with less than 10% down it typically lasts for the life of the loan. The only reliable exit is refinancing into a conventional loan once you have 20% equity.

Frequently asked questions

How much is PMI per month?

Roughly 0.5% to 1.5% of the loan per year, split monthly — so $125 to $375 a month on a $300,000 loan, or $167 to $500 on $400,000. Your exact rate depends on your credit score and down payment.

Can I avoid PMI without 20% down?

Yes — a VA loan, a piggyback 80-10-10 loan, or a lender-paid PMI option can all avoid separate PMI. Each has trade-offs, so compare the total cost carefully.

Is PMI tax deductible?

It has been deductible in some tax years but not others, and it phases out at higher incomes. It is best to assume it is not, and confirm with a tax professional.

When does PMI stop?

Automatically at 22% equity on conventional loans, or on request at 20% equity. FHA MIP may last the life of the loan unless you refinance.

See exactly what PMI adds to your payment on the HomeMath mortgage calculator — the PMI field is pre-filled so you can toggle it on and off and compare your real cost.