What you are paying for
PMI is not homeowners insurance and it is not FHA mortgage insurance. It is a premium on many conventional loans with a loan-to-value ratio above 80%.
Our payment calculator starts that premium at 0.50% of the loan per year and labels it as an estimate. Replace it with the premium on a loan estimate.
Ways people avoid it
Putting 20% down is the direct way in this model. A smaller down payment usually keeps the estimate on.
Lender-paid mortgage insurance can hide the premium inside the rate. That is a different tradeoff, not a free removal. VA loans use a funding fee instead of monthly PMI.
| Down payment | PMI in the model |
|---|---|
| 5% | Estimated |
| 10% | Estimated |
| 15% | Estimated |
| 20% | Not applied |
Calculators
Related guides
Sources
Common questions
Does every low-down-payment loan have PMI?
No. FHA uses MIP, VA uses a funding fee, and USDA uses a guarantee fee. Those are different from conventional PMI.
Can the premium change?
Yes. Credit, loan type, and the lender all matter. The 0.50% figure is a planning assumption.