PMI (Private Mortgage Insurance)
Insurance that protects the lender when a conventional borrower puts down less than 20%.
Private Mortgage Insurance (PMI) is a type of insurance required on most conventional loans when the down payment is less than 20% of the home's value.
PMI protects the lender — not you — if the loan goes into default. It is typically added to your monthly mortgage payment.
The good news: PMI is not permanent. Once you reach roughly 20% equity, you can request its removal, and it automatically terminates at 22% equity based on the original value.
Frequently asked
How much does PMI cost?
PMI typically ranges from about 0.3% to 1.5% of the loan amount per year, depending on your credit score and down payment.
Can I avoid PMI?
Yes — putting 20% down avoids PMI on conventional loans. Some lender-paid and piggyback structures can also avoid monthly PMI.