Private mortgage insurance
PMIWhat is private mortgage insurance?
PMI protects the lender, not you, and is commonly required on conventional loans when the loan-to-value ratio exceeds 80%. It typically costs about 0.3% to 1.5% of the loan per year.
What it means in practice
Under the US Homeowners Protection Act, borrowers can request PMI cancellation at 80% LTV based on the original value, and servicers must terminate it automatically at 78%.
PMI is not the same as homeowners insurance, which protects the property, or as FHA mortgage insurance premiums, which follow different and often permanent rules.
Because PMI ends partway through the loan, including it as a fixed monthly cost for thirty years overstates the true cost. This calculator can drop it automatically at the 80% threshold.