Resources · My Mortgage Company
PMI & MIP: Mortgage Insurance Explained
Mortgage insurance protects the lender — not you — when you put down less than 20%. Here is exactly how much it costs, which programs require it, and how to get rid of it.
Compare Loan OptionsPMI vs. MIP: What Is the Difference?
Both are mortgage insurance — but they work differently depending on your loan type.
PMI (Conventional)
- Applies when down payment is less than 20% on a conventional loan
- Typically 0.2%–1.5% of loan amount per year (varies by LTV and credit)
- Can be removed when loan balance reaches 80% LTV (your request)
- Automatically cancels at 78% LTV under the Homeowners Protection Act
- Rate goes away entirely — unlike FHA MIP, no lifetime requirement
MIP (FHA)
- Required on all FHA loans regardless of down payment amount
- Upfront MIP: 1.75% of loan amount (can be financed into loan)
- Annual MIP: 0.55% per year for most loans (divided by 12, added to monthly payment)
- With less than 10% down: MIP lasts the full life of the loan
- With 10%+ down: MIP cancels after 11 years
How Much Does PMI Cost?
PMI rates vary based on your loan-to-value ratio (LTV) and credit score. As a rough guide:
760 credit, 95% LTV
~0.3–0.5%/yr
~$83–$139/mo on $400k loan
700 credit, 95% LTV
~0.6–0.9%/yr
~$167–$250/mo on $400k loan
660 credit, 95% LTV
~1.0–1.5%/yr
~$278–$417/mo on $400k loan
These are illustrative examples only and are not a guarantee of your actual PMI rate. Actual rates vary by lender, insurer, credit profile, and loan structure. Consult your loan officer for an accurate estimate.
How to Eliminate PMI
Unlike FHA MIP, conventional PMI can be removed. Here are five ways to do it.
Reach 80% LTV through payments
As you pay down your mortgage, track your balance relative to the original appraised value. Request removal in writing when you hit 80%.
Home value appreciation
If your home's value has increased, a new appraisal may show you are already below 80% LTV. This can accelerate PMI removal significantly in appreciating markets.
Make extra principal payments
Additional principal payments reduce your balance faster, moving you toward the 80% threshold sooner and saving interest as well.
Refinance to a new conventional loan
If you have 20%+ equity (due to appreciation or paydown), refinancing removes PMI entirely. Run the numbers on whether the closing costs are worth the monthly savings.
Put 20% down at purchase
The cleanest solution. On a $400,000 home, 20% down ($80,000) eliminates PMI from day one. If 20% is not feasible, consider a smaller purchase or savings plan.
FHA MIP Cannot Be Removed (In Most Cases)
If you have an FHA loan with less than 10% down, MIP stays for the life of the loan. The most common solution is to refinance into a conventional loan once you have built 20%+ equity — eliminating MIP entirely. Omar can run the break-even analysis to see if refinancing makes sense for you.
Want to Minimize Mortgage Insurance?
Omar will compare FHA vs. conventional side-by-side so you can see exactly which option keeps more money in your pocket.
My Mortgage Company, Inc. · CA DRE #02168831 · NMLS #2269164. PMI rates and MIP amounts are estimates and subject to change. Actual mortgage insurance costs will be disclosed on your Loan Estimate. This is educational information, not financial advice. This is not a commitment to lend.