Everything You Need to Know About Private Mortgage Insurance (PMI)

PMI isn’t a penalty—it’s a tool that lets you buy with less than 20% down. Used wisely, it can be a bridge to ownership while you continue to build equity and savings.

PMI basics

For most conventional loans above 80% loan‑to‑value, PMI protects the lender in case of default. You pay the premium, usually as a monthly amount added to your mortgage payment. Costs depend on LTV, credit score, and loan features.

PMI, MIP, and VA—know the difference

• PMI: Conventional loans with <20% down. 

• FHA MIP: Required on FHA loans; includes an upfront premium and monthly MIP (duration depends on down payment and term). 

• VA: No monthly mortgage insurance, but most loans include a one‑time funding fee instead.

Ways to pay PMI

• Monthly: The most common, easy to cancel later. 

• Single‑premium: Pay once at closing (or finance it) for a lower monthly payment. 

• Split‑premium: Small upfront amount + reduced monthly payment, a useful middle ground.

How and when PMI goes away

With conventional loans, PMI can be canceled when you reach 80% LTV based on the original value (by request) or 78% automatically (per schedule). You can also request removal sooner if a new appraisal shows your equity exceeds 20%—for example, after improvements or market appreciation.

When PMI makes sense

If waiting to reach 20% down would cost you rising home prices or rent increases, paying PMI for a period may be the better financial move. We’ll model both paths so you can compare real dollars over time.

How Jaffe Home Loans helps

We quote multiple PMI structures, estimate the cancellation timeline, and map the cheapest route to shed the premium while keeping your monthly payment comfortable.