What Is PMI and How Much Does It Cost? (Private Mortgage Insurance Explained)

Private Mortgage Insurance (PMI) is an extra monthly fee your lender charges when your down payment is less than 20% of the home price. It protects the lender — not you — if you default on the loan. PMI typically costs 0.5% to 1.5% of the loan amount per year, adding $100 to $350 per month on a $300,000 loan.

PMI costs by down payment on a $350,000 home. At 3% down ($10,500): loan $339,500, annual PMI approximately $2,375 ($198/month). At 5% down ($17,500): loan $332,500, PMI approximately $2,328 ($194/month). At 10% down ($35,000): loan $315,000, PMI approximately $1,890 ($158/month). At 15% down ($52,500): loan $297,500, PMI approximately $1,487 ($124/month). At 20% down ($70,000): no PMI.

How to get rid of PMI. On conventional loans: request removal when you reach 20% equity (based on original value or current appraisal). It automatically drops at 22% equity. You can reach 20% faster through extra payments or if your home appreciates significantly — request a new appraisal to prove it. On FHA loans: mortgage insurance lasts the entire life of the loan regardless of equity (if you put less than 10% down). The only way to remove FHA insurance is to refinance into a conventional loan once you have 20% equity.

Should you wait to save 20% to avoid PMI? On a $350K home, the difference between 5% down now (with $194/month PMI) versus waiting 3 years to save 20% depends on home price appreciation. If prices rise 4% per year, the home costs $394,000 in 3 years — meaning you need $79,000 instead of $70,000 for 20% down, plus you paid $64,800 in rent while waiting. In many markets, buying now with PMI costs less than waiting. Use the [mortgage calculator](/calculators/mortgage) to compare scenarios with and without PMI. For more on down payment strategy, read our guide on [down payments in 2026](/blog/how-much-down-payment-house-2026).

Frequently Asked Questions:

Is PMI tax deductible? It was deductible in prior years but this provision has expired and been renewed multiple times. Check current IRS rules for your tax year.

How much does PMI add to my monthly payment? Typically $100 to $300 per month on a standard home loan, depending on your down payment percentage and credit score.