Private Mortgage Insurance (PMI)

Private mortgage insurance (PMI) is insurance that may be required on a conventional mortgage when a borrower makes a down payment of less than 20% of the home's purchase price.

PMI protects the lender if the borrower is unable to repay the loan. While PMI adds to the cost of a mortgage, it can also allow eligible borrowers to purchase a home without making a 20% down payment.

PMI allows eligible borrowers to obtain a conventional mortgage with a smaller down payment by reducing some of the lender's risk.

The cost is typically added to your mortgage expenses and may vary based on factors such as your loan amount, down payment, and credit profile. PMI protects the lender—not the borrower—if the borrower is unable to repay the loan.

The cost of PMI varies based on several factors, including the loan amount, down payment, credit profile, and other details of the loan.

If PMI is required, the estimated cost will be included in your loan disclosures. Your loan officer can help explain how PMI may affect your monthly payment and overall loan costs.

PMI may be paid in different ways depending on the loan and mortgage insurance arrangement. In many cases, the premium is included as part of the borrower's monthly mortgage payment.

Other payment options may be available, such as paying some or all of the premium upfront or using a combination of upfront and monthly payments. Your loan officer can explain which PMI options are available for your specific loan.

For many conventional mortgages, you may be able to request that PMI be canceled when your loan balance is scheduled to reach 80% of the home's original value, provided certain requirements are met.

PMI generally terminates automatically when your loan balance is scheduled to reach 78% of the home's original value, as long as your payments are current.

Different rules may apply depending on your loan and payment history. Contact your loan servicer for information about the specific requirements for removing PMI from your mortgage.

For more information about PMI cancellation and your rights, visit the Consumer Financial Protection Bureau.