US Real Estate & Mortgage Research Analyst
Published: August 4, 2026 · Updated: August 4, 2026 · 7 min read
Key Takeaways
- • PMI protects the lender when your down payment is below 20%
- • Cost in 2026 is roughly 0.3% to 1.5% of the loan per year
- • Required above an 80% loan-to-value (LTV) ratio
- • Auto-cancels at 78% LTV; request it at 80% with proof of equity
- • Avoid it with 20% down, a piggyback loan, or lender-paid MI
Private mortgage insurance is one of the first surprises for new buyers who put less than 20% down. It is not insurance for you; it protects the lender if you default. The good news: it is temporary, and there are several ways to reduce or remove it.
How Much PMI Costs in 2026
Expect to pay about 0.3% to 1.5% of the original loan amount each year. On a $300,000 loan with a 5% down payment and solid credit, that is often roughly $120 to $200 per month. Better credit and a larger down payment push the cost down.
When Lenders Require PMI
The trigger is your loan-to-value (LTV) ratio. Put down less than 20% and your LTV is above 80%, which is where most conventional loans require PMI. Government loans like FHA have their own mortgage insurance structure that often lasts much longer.
Ways to Avoid PMI
- 20% down payment: The simplest path; no PMI at all.
- Piggyback loan: A small second mortgage covers part of the down payment so the first loan stays at 80% LTV.
- Lender-paid MI: The lender pays the MI in exchange for a slightly higher interest rate.
How to Cancel PMI
Federal law requires automatic cancellation when your loan balance drops to 78% of the original value. You can ask your servicer to remove it at 80% LTV if your payments or home appreciation got you there, and a new appraisal may be needed to prove the equity.
Run the Numbers
See how PMI changes your monthly cost with the Mortgage Payment Calculator, and check how fast a 20% equity stake removes it using the Home Equity Loan Calculator.
Editor Update Note
Reviewed and updated August 4, 2026. PMI cost ranges and cancellation thresholds reflect long-standing rules; confirm your specific loan terms with your servicer.
Frequently Asked Questions
What is private mortgage insurance (PMI)?
PMI is insurance that protects the lender, not you, when your loan balance is more than 80% of the home value. Lenders require it on most conventional loans with less than a 20% down payment, because a smaller down payment means more risk for the bank.
How much does PMI cost in 2026?
PMI typically runs about 0.3% to 1.5% of the original loan amount per year, based on your credit score, down payment, and loan type. On a $300,000 loan with a 5% down payment, that often works out to roughly $120 to $200 per month.
When is PMI required?
PMI is usually required when your loan-to-value (LTV) ratio is above 80%, meaning your down payment is under 20%. Once you reach 20% equity, the requirement to carry PMI generally ends, though the automatic cancellation rules vary.
How can I avoid PMI?
The cleanest way is a 20% or larger down payment. Alternatives include a piggyback loan (a small second mortgage covering part of the down payment), lender-paid MI rolled into a slightly higher rate, or a portfolio loan that waives MI. Each trades cost differently, so compare the total.
How do I cancel PMI?
By law, PMI must automatically cancel when your loan balance reaches 78% of the original value. You can usually request cancellation earlier at 80% LTV if your payments or home appreciation got you there, and you may need a new appraisal to prove the equity.