{"id":302244,"date":"2024-11-13T08:53:29","date_gmt":"2024-11-13T13:53:29","guid":{"rendered":"https:\/\/www.houzeo.com\/blog\/?p=302244"},"modified":"2025-02-04T04:58:12","modified_gmt":"2025-02-04T09:58:12","slug":"what-is-pmi","status":"publish","type":"post","link":"https:\/\/www.houzeo.com\/blog\/what-is-pmi\/","title":{"rendered":"What Is PMI And How Much Does It Cost?\u00a0"},"content":{"rendered":"\n<p class=\"highlight\">Private mortgage insurance (PMI) is an additional cost that you pay when you make a down payment lower than <a href=\"https:\/\/www.cnbc.com\/select\/what-is-mortgage-insurance\/\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">20%<\/a>. It protects lenders in case you default on the loan. <\/p>\n\n\n\n<p>The exact cost depends on the <a href=\"https:\/\/www.houzeo.com\/blog\/types-of-home-loans\/\" target=\"_blank\" rel=\"noreferrer noopener\">type of home loan<\/a>, but usually falls between <a href=\"https:\/\/www.urban.org\/sites\/default\/files\/2024-03\/Housing_Finance_At_A_Glance_Monthly_Chartbook_March_2024.pdf\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">0.46% to 1.5%<\/a> of the total loan amount. But don&#8217;t worry! PMI is not temporary; it ends once you achieve 20% equity in your home.<\/p>\n\n\n\n<p>It is crucial to find a lender suited to your needs that can help you save money on your private mortgage insurance. So, explore lender options near you to make your home-buying journey easy!<\/p>\n\n\n\n<div style=\"height:0px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"margin-top-28 wp-block-heading\" id=\"What-Is-Private-Mortgage-Insurance\"><strong>What Is Private Mortgage Insurance?<\/strong><\/h2>\n\n\n\n<p>PMI is an additional cost that you have to pay when you put down less than 20% of your home&#8217;s purchase price. This insurance protects the lender in case you can&#8217;t make the mortgage payments.&nbsp;<\/p>\n\n\n\n<p>PMI enables you to <a href=\"https:\/\/www.houzeo.com\/blog\/how-to-buy-a-house\/\" target=\"_blank\" rel=\"noreferrer noopener\">buy a house<\/a> with a lower down payment. However, you will have to pay extra each month, on top of your regular mortgage payments.<\/p>\n\n\n\n<h2 class=\"margin-top-28 wp-block-heading\" id=\"How-Much-Does-PMI-Cost\"><strong>How Much Does PMI Cost?<\/strong><\/h2>\n\n\n\n<p>Private mortgage insurance isn\u2019t a flat fee. Rather, it is calculated as a percentage of your loan amount. It ranges from 0.46% to 1.5% of the mortgage, depending on your <a href=\"https:\/\/www.houzeo.com\/blog\/what-credit-score-is-needed-to-buy-a-house\/\" target=\"_blank\" rel=\"noreferrer noopener\">credit score<\/a>. You generally pay it as part of your monthly mortgage payments.&nbsp;<\/p>\n\n\n\n<h2 class=\"margin-top-28 wp-block-heading\" id=\"Factors-Affecting-Private-Mortgage-Insurance\"><strong>Factors Affecting Private Mortgage Insurance<\/strong><\/h2>\n\n\n\n<p>Some lenders permit a combination of upfront and monthly payments, or a single upfront payment at closing. Some of the factors that influence the cost of PMI are:&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Mortgage Size:<\/strong> The more you borrow, the more you need to pay for private mortgage insurance.<\/li><li><strong>Down Payment: <\/strong>The percentage of PMI will be higher if you make a <a href=\"https:\/\/www.houzeo.com\/blog\/what-is-a-down-payment\/\" target=\"_blank\" rel=\"noreferrer noopener\">down payment<\/a> less than 20%.<\/li><li><strong>Loan-to-Value Ratio:<\/strong> The <a href=\"https:\/\/www.houzeo.com\/blog\/loan-to-value-ratio\/\" target=\"_blank\" rel=\"noreferrer noopener\">LTV ratio<\/a> is the ratio of the loan amount to the&nbsp;appraised value of the property. A high LTV ratio, which indicates a small down payment, leads to a high PMI.<\/li><li><strong>Credit Score:<\/strong> The cost of mortgage insurance is lower for borrowers with a <a href=\"https:\/\/www.houzeo.com\/blog\/what-is-a-good-credit-score\/\" target=\"_blank\" rel=\"noreferrer noopener\">good credit score<\/a>. If your credit score is 760 or above, your PMI will be low.<\/li><li><strong>Type of Mortgage:<\/strong> Private loan insurance may cost more for an <a href=\"https:\/\/www.houzeo.com\/blog\/adjustable-rate-mortgage\/\" target=\"_blank\" rel=\"noreferrer noopener\">adjustable-rate mortgage<\/a> than a fixed-rate mortgage. This is because the interest rate fluctuates in ARMs.<\/li><\/ul>\n\n\n\n<h2 class=\"margin-top-28 wp-block-heading\" id=\"Types-of-PMI\"><strong>What Are the Types of PMI<\/strong>?<\/h2>\n\n\n\n<p>Here are the different types of private mortgage insurance and their benefits:<\/p>\n\n\n\n<h3 class=\"margin-top-15 wp-block-heading\"><strong>Borrower-Paid Mortgage Insurance<\/strong><\/h3>\n\n\n\n<p>It is the most common private mortgage insurance. You pay the premium each month, on top of your regular loan payment. <\/p>\n\n\n\n<h3 class=\"margin-top-15 wp-block-heading\"><strong>Lender-Paid Mortgage Insurance&nbsp;<\/strong><\/h3>\n\n\n\n<p>The lender pays the PMI premium upfront, in exchange for a slightly higher interest rate on your loan. It&#8217;s the best option if you don\u2019t want to pay insurance every month.<\/p>\n\n\n\n<h3 class=\"margin-top-15 wp-block-heading\"><strong>Single-Premium Mortgage Insurance<\/strong><\/h3>\n\n\n\n<p>Here, you pay a one-time upfront premium instead of monthly installments. This is a good option if you want <a href=\"https:\/\/www.houzeo.com\/blog\/mortgage-insurance\/\" target=\"_blank\" rel=\"noreferrer noopener\">mortgage insurance<\/a> coverage but would rather have a smaller monthly payment.&nbsp;<\/p>\n\n\n\n<h3 class=\"margin-top-15 wp-block-heading\"><strong>Split-Premium Mortgage Insurance<\/strong><\/h3>\n\n\n\n<p>This type of PMI combines both elements of borrower-paid and single-premium insurance. You pay a smaller upfront premium and a lower monthly premium as compared to traditional borrower-paid insurance.&nbsp;<\/p>\n\n\n\n<h2 class=\"margin-top-28 wp-block-heading\" id=\"PMI-for-All-Types-of-Mortgages\"><strong>Do I Need PMI for All Types of Mortgages?<\/strong><\/h2>\n\n\n\n<p>There are some loans for which PMI is not mandatory. They are:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>FHA Loans:<\/strong> <a href=\"https:\/\/www.houzeo.com\/blog\/fha-loans\/\" target=\"_blank\" rel=\"noreferrer noopener\">FHA loans<\/a> are government-insured loans that do not require PMI. Instead, you have to pay a mortgage insurance premium, which may be lower than PMI. <\/li><li><strong>USDA Loans:<\/strong> <a href=\"https:\/\/www.houzeo.com\/blog\/usda-loans\/\" target=\"_blank\" rel=\"noreferrer noopener\">USDA loans<\/a> are government-backed loans primarily intended for low-income rural homeowners who won&#8217;t need mortgage insurance.<\/li><li><strong>VA Loans:<\/strong> The <a href=\"https:\/\/www.houzeo.com\/blog\/what-is-va-loan\/\" target=\"_blank\" rel=\"noreferrer noopener\">VA loan<\/a> is designed for veterans and eligible service members. It eliminates the need for private mortgage insurance. <\/li><\/ul>\n\n\n\n<h2 class=\"margin-top-28 wp-block-heading\" id=\"Differences-Between-PMI-MIP-MPI\"><strong>PMI vs. MIP vs. MPI<\/strong><\/h2>\n\n\n\n<p>Here are the key differences between private mortgage insurance, mortgage insurance premium, and mortgage protection insurance. <\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Feature&nbsp;<\/strong><\/td><td><strong>PMI <\/strong><\/td><td><strong>MIP <\/strong><\/td><td><strong>MPI <\/strong><\/td><\/tr><tr><td>Function&nbsp;<\/td><td>Protects lenders against loan default.<\/td><td>Safeguards lenders against default on FHA loans specifically.<\/td><td>Protects the borrower&#8217;s capacity to make mortgage payments in the event of financial difficulty.<\/td><\/tr><tr><td>Duration&nbsp;<\/td><td>Typically ends once the loan-to-value ratio reaches 80%.<\/td><td>Cannot be canceled unless the loan is refinanced.<\/td><td>Can be canceled anytime you want.&nbsp;<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"margin-top-28 wp-block-heading\" id=\"Pros-And-Cons\"><strong>Pros And Cons of Private Mortgage Insurance&nbsp;<\/strong><\/h2>\n\n\n\n<p>Here are the advantages and disadvantages of private mortgage insurance:<br><br><strong>Pros&nbsp;<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Earlier Homeownership: <\/strong>Private mortgage insurance lets you buy a home fast with a low down payment. It helps you avoid delays and potential missed opportunities.<\/li><li><strong>Favorable Interest Rates: <\/strong>With PMI, you won&#8217;t have to delay homeownership due to high interest rates. A competitive interest rate can lead to significant cost savings throughout the loan period. <\/li><li><strong>Debt Payment: <\/strong>PMI allows you to pay off costly debt with the savings from your down payment. <\/li><\/ul>\n\n\n\n<p><strong>Cons&nbsp;<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Increased Overall Costs: <\/strong>The cost of private mortgage insurance is added to your monthly mortgage payments. This can strain your budget and limit your spending power.&nbsp;<\/li><li><strong>Difficulties with Cancellation: <\/strong>You may need to <a href=\"https:\/\/www.houzeo.com\/blog\/how-does-refinancing-work\/\" target=\"_blank\" rel=\"noreferrer noopener\">refinance the mortgage<\/a> to cancel mortgage insurance without incurring additional costs.&nbsp;<\/li><\/ul>\n\n\n\n<h2 class=\"margin-top-28 wp-block-heading\" id=\"How-to-Get-Rid-of-PMI\"><strong>How to Get Rid of PMI?<\/strong><\/h2>\n\n\n\n<p>Some effective ways to eliminate private mortgage insurance from your mortgage payments are:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Reach 20% Equity: <\/strong>It shows your lender that your loan-to-value ratio is lower, and results in the automatic cancellation of your PMI.<\/li><li><strong>Refinance Your Mortgage: <\/strong>You can refinance your mortgage with a <a href=\"https:\/\/www.houzeo.com\/blog\/conventional-loan\/\" target=\"_blank\" rel=\"noreferrer noopener\">conventional loan<\/a> at a lower loan-to-value ratio to eliminate private mortgage insurance. However, make sure to consider refinancing costs.<\/li><li><strong>Home Appraisal: <\/strong>If your home value has increased, a new appraisal might show sufficient equity to get rid of PMI. This approach will require an <a href=\"https:\/\/www.houzeo.com\/blog\/home-appraisal-cost\/\" target=\"_blank\" rel=\"noreferrer noopener\">appraisal fee<\/a> and lender approval.&nbsp;<\/li><\/ul>\n\n\n\n<h2 class=\"margin-top-28 wp-block-heading\" id=\"Bottom-Line\"><strong>Should You Opt for PMI?<\/strong><\/h2>\n\n\n\n<p>If you make a down payment less than 20%, you need to pay private mortgage insurance. It allows you to save on upfront costs and reach homeownership sooner. <\/p>\n\n\n\n<p>However, PMI premiums can increase your overall mortgage costs. Make sure you find a lender who offers the best terms for you. Browse mortgage lenders near you today!<\/p>\n\n\n\n<h2 class=\"margin-top-28 wp-block-heading\" id=\"faq\"><strong>Frequently Asked Questions<\/strong><\/h2>\n\n\n\t\t<div class=\"wp-faq-schema-wrap wp-faq-schema-accordion\">\n\t\t\t\t\t\t<div class=\"wp-faq-schema-items\">\n\t\t\t\t\t\t\t\t\t<p class=\"ui-accordion-header\">\n\t\t\t\t\t\tWhat does PMI stand for?\t\t\t\t\t\t<span class=\"ui-accordion-header-icon ui-icon ui-icon-triangle-1-s\"><\/span>\n\t\t\t\t\t<\/p>\n\t\t\t\t\t<div class=\"ui-accordion-content\">\n\t\t\t\t\t\t<p>PMI refers to <a href=\"#What-Is-Private-Mortgage-Insurance\">private mortgage insurance<\/a>. It protects your lender if you can\u2019t make your mortgage payments. <\/p>\n\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t\t<p class=\"ui-accordion-header\">\n\t\t\t\t\t\tHow much does PMI cost?\t\t\t\t\t\t<span class=\"ui-accordion-header-icon ui-icon ui-icon-triangle-1-s\"><\/span>\n\t\t\t\t\t<\/p>\n\t\t\t\t\t<div class=\"ui-accordion-content\">\n\t\t\t\t\t\t<p>The <a href=\"#How-Much-Does-PMI-Cost\">cost of PMI<\/a> varies depending on your loan amount, loan terms, and credit score. It usually ranges from 0.46 to 1.5% of the loan amount each year. <\/p>\n\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t\t<p class=\"ui-accordion-header\">\n\t\t\t\t\t\tIs PMI worth it?\t\t\t\t\t\t<span class=\"ui-accordion-header-icon ui-icon ui-icon-triangle-1-s\"><\/span>\n\t\t\t\t\t<\/p>\n\t\t\t\t\t<div class=\"ui-accordion-content\">\n\t\t\t\t\t\t<p>PMI helps you buy a house sooner and lock in a good interest rate. However, it adds to your monthly <a href=\"https:\/\/www.houzeo.com\/blog\/average-mortgage-payment\/\" target=\"_blank\">mortgage payment<\/a>. <\/p>\n\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\n","protected":false},"excerpt":{"rendered":"<div class=\"new-excerpt\"><p class=\"small-desc\">Here's all you need to know about Private Mortgage Insurance: when you need PMI, how it helps you buy a house, and the pros and cons to...<\/p><\/div><div class=\"reading_date\"><span class=\"readtime\">5 mins read<\/span><span class=\"date\">Nov 13, 2024<\/span><\/div>","protected":false},"author":102,"featured_media":428151,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[46225,46240],"tags":[36432,36079,36430,36078,36084,36080,36081],"class_list":["post-302244","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-buyer","category-mortgage-terms","tag-loan-pmi","tag-pmi-insurance","tag-pmi-meaning","tag-pmi-mortgage","tag-what-is-pmi-in-mortgage","tag-what-is-pmi-insurance","tag-what-is-pmi-on-a-mortgage"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What is PMI and How Much Does It Cost?<\/title>\n<meta name=\"description\" content=\"Private mortgage insurance (PMI) is an additional cost you have to pay when you make a down payment of less than 20%.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.houzeo.com\/blog\/what-is-pmi\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What is PMI and How Much Does It Cost?\" \/>\n<meta property=\"og:description\" content=\"Private mortgage insurance (PMI) is an additional cost you have to pay when you make a down payment of less than 20%.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.houzeo.com\/blog\/what-is-pmi\/\" \/>\n<meta property=\"og:site_name\" content=\"Houzeo Blog\" \/>\n<meta property=\"article:published_time\" content=\"2024-11-13T13:53:29+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-02-04T09:58:12+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.houzeo.com\/blog\/wp-content\/uploads\/2023\/07\/What-is-PMI.webp\" \/>\n\t<meta property=\"og:image:width\" content=\"810\" \/>\n\t<meta property=\"og:image:height\" content=\"435\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/webp\" \/>\n<meta name=\"author\" content=\"Bhagyesh Behere\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Bhagyesh Behere\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"What is PMI and How Much Does It Cost?","description":"Private mortgage insurance (PMI) is an additional cost you have to pay when you make a down payment of less than 20%.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.houzeo.com\/blog\/what-is-pmi\/","og_locale":"en_US","og_type":"article","og_title":"What is PMI and How Much Does It Cost?","og_description":"Private mortgage insurance (PMI) is an additional cost you have to pay when you make a down payment of less than 20%.","og_url":"https:\/\/www.houzeo.com\/blog\/what-is-pmi\/","og_site_name":"Houzeo Blog","article_published_time":"2024-11-13T13:53:29+00:00","article_modified_time":"2025-02-04T09:58:12+00:00","og_image":[{"width":810,"height":435,"url":"https:\/\/www.houzeo.com\/blog\/wp-content\/uploads\/2023\/07\/What-is-PMI.webp","type":"image\/webp"}],"author":"Bhagyesh Behere","twitter_card":"summary_large_image","twitter_misc":{"Written by":"Bhagyesh Behere","Est. reading time":"5 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/www.houzeo.com\/blog\/what-is-pmi\/","url":"https:\/\/www.houzeo.com\/blog\/what-is-pmi\/","name":"What is PMI and How Much Does It Cost?","isPartOf":{"@id":"https:\/\/www.houzeo.com\/blog\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.houzeo.com\/blog\/what-is-pmi\/#primaryimage"},"image":{"@id":"https:\/\/www.houzeo.com\/blog\/what-is-pmi\/#primaryimage"},"thumbnailUrl":"https:\/\/www.houzeo.com\/blog\/wp-content\/uploads\/2023\/07\/What-is-PMI.webp","datePublished":"2024-11-13T13:53:29+00:00","dateModified":"2025-02-04T09:58:12+00:00","description":"Private mortgage insurance (PMI) is an additional cost you have to pay when you make a down payment of less than 20%.","inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.houzeo.com\/blog\/what-is-pmi\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.houzeo.com\/blog\/what-is-pmi\/#primaryimage","url":"https:\/\/www.houzeo.com\/blog\/wp-content\/uploads\/2023\/07\/What-is-PMI.webp","contentUrl":"https:\/\/www.houzeo.com\/blog\/wp-content\/uploads\/2023\/07\/What-is-PMI.webp","width":810,"height":435,"caption":"What is PMI"},{"@type":"WebSite","@id":"https:\/\/www.houzeo.com\/blog\/#website","url":"https:\/\/www.houzeo.com\/blog\/","name":"Houzeo Blog","description":"","publisher":{"@id":"https:\/\/www.houzeo.com\/blog\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.houzeo.com\/blog\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/www.houzeo.com\/blog\/#organization","name":"Houzeo","url":"https:\/\/www.houzeo.com\/blog\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.houzeo.com\/blog\/#\/schema\/logo\/image\/","url":"https:\/\/www.houzeo.com\/blog\/wp-content\/uploads\/2020\/07\/new-logo.png","contentUrl":"https:\/\/www.houzeo.com\/blog\/wp-content\/uploads\/2020\/07\/new-logo.png","width":190,"height":55,"caption":"Houzeo"},"image":{"@id":"https:\/\/www.houzeo.com\/blog\/#\/schema\/logo\/image\/"}}]}},"_links":{"self":[{"href":"https:\/\/www.houzeo.com\/blog\/wp-json\/wp\/v2\/posts\/302244","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.houzeo.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.houzeo.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.houzeo.com\/blog\/wp-json\/wp\/v2\/users\/102"}],"replies":[{"embeddable":true,"href":"https:\/\/www.houzeo.com\/blog\/wp-json\/wp\/v2\/comments?post=302244"}],"version-history":[{"count":79,"href":"https:\/\/www.houzeo.com\/blog\/wp-json\/wp\/v2\/posts\/302244\/revisions"}],"predecessor-version":[{"id":909106,"href":"https:\/\/www.houzeo.com\/blog\/wp-json\/wp\/v2\/posts\/302244\/revisions\/909106"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.houzeo.com\/blog\/wp-json\/wp\/v2\/media\/428151"}],"wp:attachment":[{"href":"https:\/\/www.houzeo.com\/blog\/wp-json\/wp\/v2\/media?parent=302244"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.houzeo.com\/blog\/wp-json\/wp\/v2\/categories?post=302244"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.houzeo.com\/blog\/wp-json\/wp\/v2\/tags?post=302244"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}