What is PMI, and can I avoid it?

PMI — private mortgage insurance — is the monthly charge added to a conventional loan when you put down less than 20%. It protects the lender if the loan defaults, not you. But calling it pure cost misses the point: PMI is the price of buying years sooner than a 20% down payment would allow, and unlike rent, it comes attached to a home you're building equity in.

How it ends — the federal rules

PMI is temporary by design. You can request cancellation once your balance reaches 80% of the home's original value — roughly 20% equity — with a decent payment history. It must end automatically at 78%. And there's a third exit people rarely hear about: it must terminate at the midpoint of your loan's schedule regardless of balance (rules verified against CFPB guidance, August 2026). Equity from appreciation or improvements can sometimes accelerate the timeline — your loan servicer explains their exact process.

PMI versus FHA's version

This removability is the big divide between conventional loans and FHA: conventional PMI falls away as equity grows, while FHA's mortgage insurance usually lasts the life of the loan with less than 10% down. Five years in, that difference is real money every month.

Avoiding it — and when not to bother

Twenty percent down avoids PMI entirely — but waiting years just to dodge it usually costs more than it saves. There are also lender-paid PMI structures that trade the monthly charge for a higher rate; a lender can lay out whether that math favors you.

When we look at homes, I'll show you the payment with PMI included — the real number, no surprises — and where the equity line sits that makes it fall away.

Mayra Cordero

REALTOR® · Central Florida

This answer is general education, not legal, tax, or financial advice. Your situation is unique — let's talk through the specifics together.