PMI has a bad reputation it mostly doesn’t deserve. People hear “insurance that protects the lender, paid by me” and read it as a penalty. The more useful way to see it: PMI is the trade that lets a lender say yes with less than 20% down. Without it, the choice for most buyers isn’t “20% down or 10% down” — it’s “buy now or keep renting for three more years while you save.”

This page covers what PMI is, what drives its cost, the forms it takes, and how to avoid it. The mechanics of getting rid of it once you have it are involved enough to have their own breakdown, which I link to below.

What PMI is and why it exists

Private mortgage insurance is a policy that protects the lender, not you, against the higher risk of a loan with a smaller down payment. It applies to conventional loans when you put down less than 20%. In exchange for carrying it, you get access to the loan at all — and to today’s home prices instead of a version of them years from now.

The key word is conventional. PMI lives on conventional loans, and unlike its FHA cousin, it’s built to come off. More on that distinction below.

What it costs, and what moves the price

PMI isn’t a flat fee — it’s priced to your risk, which means a few things you can actually influence drive what you pay:

• Your down payment. The closer you get to 20%, the less the insurer is on the hook for, and the cheaper the premium.
• Your credit score. This is the big lever, and it’s the one people underestimate. The same loan can carry a very different PMI premium at one score versus another.
• Your loan-to-value. Tied to the down payment, but it’s the ratio the pricing actually keys off.

How much credit matters here is not abstract. I watched a single paid-down credit card move a client across a scoring threshold and change both his closing costs and his monthly PMI — the full story is in the $3,889 difference between two credit scores.

Borrower-paid, lender-paid, single-premium

PMI comes in a few structures, and the right one depends on how long you’ll keep the loan:

How to avoid PMI

There are a few honest ways around it, and one that just renames it:

• Put 20% down. The straightforward route, if you have the funds and buying now still beats waiting to save them.
• A piggyback structure. A second loan covering part of the gap so the first stays at 80%. It can work, but it trades PMI for a second payment — the math has to actually favor it.
• Lender-paid PMI. Worth naming honestly: this doesn’t remove PMI, it hides it in your rate. Sometimes that’s the better deal, sometimes it isn’t — it’s a calculation, not a free lunch.

Removing PMI once you have it

This is where conventional PMI shines: it’s designed to end. As you build equity, you can have it cancelled, and there’s a point at which the lender must drop it automatically. There are four routes to getting there, and a couple of them are faster than most people realize — I cover all of them, step by step, in how to cancel PMI.

Your home’s value plays a role too

Because PMI is tied to your loan-to-value, your home’s appraised value matters as much as your loan balance — rising value can move you toward cancellation faster. That’s also why the appraisal, and sometimes the option to waive it, deserves real thought. I get into when to take an appraisal waiver and when to walk away in appraisal waivers: when to take one, when to walk away.

The pieces, broken down