If you buy with less than 20% down on a conventional loan, you'll likely pay private mortgage insurance, or PMI. Buyers often treat it as a penalty to avoid at all costs — but that framing can actually cost you more than the PMI itself. Here's what PMI really is, what it costs, and exactly how to get rid of it.
Source: Homeowners Protection Act; consumer PMI guidance per the CFPB.
What PMI is and why it exists
PMI protects the lender — not you — if you default, and it's the trade-off that lets you buy with a smaller down payment. It's typically rolled into your monthly mortgage payment. It applies to conventional loans with less than 20% down; government loans have their own mortgage-insurance structures (FHA's, for example, often lasts the life of the loan, which is an important difference).
Why PMI isn't always the enemy
The instinct to avoid PMI by waiting to save 20% can backfire. If home prices or rents rise while you save, you may lose more to waiting than you'd ever pay in PMI — and PMI on a conventional loan is temporary. For many buyers, buying sooner with PMI and dropping it later beats sitting on the sidelines for years. Run the math for your situation rather than treating 20% as a hard rule.
How to get rid of conventional PMI
On a conventional loan, you can request PMI cancellation once you reach about 20% equity (an 80% loan-to-value ratio) based on the original value, and by federal law your lender must automatically terminate it when your balance reaches 78% of the original value. Extra principal payments or rising home value can get you there faster; a new appraisal showing higher value may also let you cancel sooner. Know your numbers and ask.
Factor it into the loan you choose
Because PMI rules differ sharply between conventional and government loans, the loan type you pick affects how much mortgage insurance you'll pay and for how long. A good lender will model these scenarios for you. RESMP can connect you with verified local lenders to compare options — including how quickly you could shed PMI under each — at no cost to you.
Frequently Asked Questions
What is PMI and who does it protect?
Private mortgage insurance protects the lender (not you) if you default, and it's what lets you buy with less than 20% down on a conventional loan. It's usually added to your monthly payment.
How do I get rid of PMI?
On a conventional loan, you can request cancellation at about 20% equity (80% LTV), and lenders must automatically remove it at 78% of the original value. Extra payments, rising home value, or a new appraisal can speed it up.
Should I wait until I have 20% down to avoid PMI?
Not necessarily. If prices or rents rise while you save, waiting can cost more than PMI — which is temporary on conventional loans. Run the numbers; buying sooner with removable PMI often wins.
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May 2026