PMI Explained: What It Costs and 4 Ways to Avoid It
Published 2026-07-31 · Migrify.AI
Put less than 20% down on a conventional mortgage and your lender will almost always require private mortgage insurance (PMI). It protects the lender — not you — and it's one of the easiest costs to underestimate.
What PMI actually costs
PMI typically runs 0.3% to 1.5% of your loan amount per year, depending on your credit score and down payment. On a $340,000 loan at a middle-of-the-road 0.6% rate, that's about $170 a month — money that builds no equity.
Our free mortgage calculator adds PMI automatically whenever your down payment is under 20%, and drops it the moment you cross the threshold, so you can see the exact break-even.
When PMI ends
- Automatically at 78% loan-to-value (when you've paid the loan down to 78% of the original home price).
- By request at 80% LTV — you can ask your servicer to cancel once you reach 20% equity.
- By appreciation — if your home's value rises, a new appraisal may get you to 20% equity years early.
Four ways to avoid it
- Put 20% down. The obvious one — but don't drain your emergency fund to get there. A slightly higher payment beats being cash-poor in year one.
- Lender-paid PMI. The lender covers PMI in exchange for a higher rate. Sometimes cheaper, but the higher rate never cancels — run both versions through the calculator.
- Piggyback loan (80/10/10). A second loan covers part of the down payment. Compare total monthly cost carefully.
- VA loans. Eligible veterans pay no monthly mortgage insurance at any down payment.
Is paying PMI ever the right move?
Often, yes. If saving a full 20% would take years while prices and rents rise, buying sooner with 10% down and ~$150/month of temporary PMI can come out ahead. The way to know is to compare both scenarios side by side — try it in the calculator with your own numbers.
Run your own numbers: the free Migrify.AI calculator shows your full payment — taxes, insurance, and PMI included — in seconds, with no sign-up and no credit impact.