If you’re buying a home with less than 20% down, learning how to avoid PMI can save you thousands of dollars. Private mortgage insurance adds a monthly cost to your loan, and it protects the lender, not you. In this guide, we explain what PMI is, how much it costs, how to avoid it from the start and how to remove it once you already have it.
What Is PMI?
PMI, or private mortgage insurance, is a type of insurance that lenders usually require on conventional loans when the down payment is less than 20% of the home’s price. If you stop paying your mortgage, PMI helps the lender recover part of its losses.
Before learning how to avoid PMI, it’s important to understand two things:
- PMI protects the lender, not you. It doesn’t cover you if you lose your job or can’t make your payments.
- PMI is different from homeowners insurance, which protects your home and belongings.
PMI only applies to conventional loans. FHA loans have their own mortgage insurance, called MIP, with different rules. VA loans don’t have monthly mortgage insurance at all.
How Much Does PMI Cost?
According to Freddie Mac, PMI usually costs between $30 and $70 per month for every $100,000 borrowed. The exact amount depends on your credit score, your down payment and the size of your loan.
Here’s an example for a $350,000 home with 5% down:
| Amount | |
|---|---|
| Down payment (5%) | $17,500 |
| Loan amount | $332,500 |
| Estimated PMI per month | $100 to $233 |
| Years until PMI ends automatically (on schedule) | About 11 |
| Estimated total PMI paid | Roughly $12,000 to $28,000 |
That’s a lot of money for insurance that doesn’t protect you. That’s why knowing how to avoid PMI, or how to get rid of it as soon as possible, is so valuable. These figures assume a 30-year fixed loan at an example rate of 6.25%; your real numbers will be different.
How to Avoid PMI: 7 Proven Ways
These are the most effective strategies, from the most obvious to the least known.
1. Put 20% Down
When people ask how to avoid PMI, the simplest answer is to make a down payment of at least 20% on a conventional loan. It’s not easy for everyone, but even getting closer to 20% can lower your PMI rate, since lenders charge less when you borrow a smaller share of the home’s value.
2. Use a Piggyback Loan (80-10-10)
With a piggyback loan, you take out two loans at the same time: a first mortgage for 80% of the price, a second loan for 10%, and you pay the remaining 10% as a down payment. Because the first mortgage is only 80% of the price, there’s no PMI, which makes it a popular choice for buyers researching how to avoid PMI.
The downside is that the second loan usually has a higher interest rate, so compare the total cost before choosing this option.
3. Choose Lender-Paid Mortgage Insurance (LPMI)
Some lenders offer to pay the mortgage insurance for you in exchange for a slightly higher interest rate. You won’t see PMI on your monthly statement, but you’ll pay more interest for the life of the loan, and unlike regular PMI, it can’t be cancelled. LPMI can make sense if you plan to sell or refinance within a few years.
4. Get a VA Loan If You’re Eligible
If you’re a veteran, an active-duty service member or an eligible surviving spouse, a VA loan is the easiest answer to how to avoid PMI. VA loans don’t require monthly mortgage insurance, even with no down payment. Instead, most borrowers pay a one-time funding fee, which some veterans don’t have to pay at all.
5. Look for Special Lender Programs
Some banks and credit unions offer conventional loans with low down payments and no PMI, especially for low- to moderate-income buyers or first-time buyers. They may have income limits or other requirements, but they’re worth asking about if you want to know how to avoid PMI with a small down payment.
6. Pay PMI Upfront (Single-Premium PMI)
Instead of paying PMI every month, some lenders let you pay it in one lump sum at closing. Your monthly payment will be lower, but you’ll need more cash upfront, and you usually won’t get that money back if you sell or refinance early.
7. Improve Your Credit Score Before Buying
This doesn’t eliminate PMI, but it can reduce it a lot. Borrowers with higher credit scores usually get much lower PMI rates. If you’re a few months away from buying, raising your score can lower both your PMI and your interest rate.
How to Remove PMI If You Already Have It
If it’s too late to think about how to avoid PMI because you already pay it, the good news is that it doesn’t last forever on a conventional loan. Under the federal Homeowners Protection Act, you have several ways out:
- Request cancellation at 80%: you can ask your loan servicer in writing to cancel PMI once your balance is scheduled to reach 80% of your home’s original value. You can also ask earlier if extra payments get you there sooner.
- Automatic termination at 78%: your servicer generally must end PMI when your balance is scheduled to reach 78% of the original value, as long as you’re current on your payments.
- Midpoint of the loan: PMI must also end once you reach the halfway point of your loan term, such as 15 years on a 30-year loan, even if you haven’t reached 78%.
To request cancellation, you usually need a good payment history, no second mortgage on the home and, in some cases, an appraisal showing your home hasn’t lost value.
There are also two faster routes:
- Make extra payments. Paying extra toward the principal helps you reach 80% sooner.
- Use your home’s increased value. If your home has gone up in value, some lenders let you remove PMI based on a new appraisal. Each lender has its own rules, so ask your servicer.
And if rates are favorable, refinancing into a new loan once you have 20% equity can also remove PMI, but only if the savings are bigger than the closing costs.
Is PMI Always Bad?
Not necessarily. PMI has a cost, but it also lets you buy a home years earlier instead of waiting until you save 20%. In many markets, home prices can rise faster than you can save, so paying PMI for a few years may still be a smart decision.
The key is to know how to avoid PMI when it’s possible, and to have a plan to remove it as soon as you can when it isn’t.
Is PMI Tax Deductible?
Starting with tax year 2026, the deduction for mortgage insurance premiums is available again under the One Big Beautiful Bill Act. To claim it, you need to itemize your deductions, and it phases out for households with higher incomes, starting above $100,000 of adjusted gross income for married couples. Tax rules can be complex, so check with a tax professional before counting on this deduction.
A Personal Note
When I started researching how to avoid PMI, what surprised me most was the total cost. One or two hundred dollars a month doesn’t sound dramatic, but added up over ten years it can reach the price of a car, and it doesn’t protect the borrower at all. At the same time, I understood that waiting years to save 20% isn’t always the right answer either. For me, the most useful idea is this: if you have PMI, mark on your calendar the month you’ll reach 80% and ask for the cancellation yourself instead of waiting for the bank to do it.
— José María, Finanzasclave
Final Thoughts
PMI is a common cost for buyers who put less than 20% down on a conventional loan, but it’s not permanent and it’s not always unavoidable. Putting 20% down, using a piggyback loan, getting a VA loan or choosing lender-paid insurance are all good answers to how to avoid PMI. And if you already pay PMI, you can request its cancellation at 80% of your home’s original value. Compare your options with several lenders and choose the one that fits your budget and your plans.
Disclaimer: This article is for informational purposes only and does not constitute financial or tax advice. We are not a lender, financial advisor or tax professional. Figures are examples and were checked in October 2026. Consult a licensed professional before making any decision.