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title: “Conventional Loan PMI: How It Works and When It Goes Away” ogImage: “/og/satori/conventional-loan-pmi-removal-guide.png” description: “Detailed guide to private mortgage insurance on conventional loans, including costs, when PMI cancels automatically, and strategies to remove it faster.” pubDate: 2026-03-18 faqSchema:

• question: “How much does conventional PMI cost?” answer: “Conventional PMI typically costs 0.22% to 2.25% of the loan amount per year, depending on your credit score, down payment, and loan type. For a $300,000 loan, that is $550 to $6,750 per year.”
• question: “When does PMI automatically cancel on a conventional loan?” answer: “By law, your lender must automatically cancel PMI when your mortgage balance reaches 78% of the original home value, provided you are current on payments. You can also request cancellation at 80% LTV.”
• question: “Can I remove PMI without refinancing?” answer: “Yes, you can request PMI removal once you reach 80% LTV through a combination of payments and home appreciation. Your lender may require a new appraisal to confirm current value.”
• question: “Is PMI tax deductible?” answer: “PMI deductibility has been extended periodically by Congress. For 2026, check current tax law. When deductible, it is available for households with adjusted gross income below $109,000.”
• question: “How is PMI different from FHA MIP?” answer: “Conventional PMI automatically cancels at 78% LTV and can be requested at 80%. FHA MIP lasts for the entire loan term (with less than 10% down) or 11 years (with 10%+ down). PMI is also generally cheaper for borrowers with good credit.”---

Quick Answer

Private mortgage insurance (PMI) on conventional loans typically costs 0.22-2.25% of the loan amount per year and is required when your down payment is less than 20%. The key advantage of conventional PMI over FHA MIP is that it automatically cancels at 78% loan-to-value ratio, saving you thousands compared to FHA’s lifetime mortgage insurance requirement.

Key Takeaways

• PMI costs 0.22-2.25% annually depending on credit score and down payment
• Automatic cancellation at 78% LTV (request at 80%)
• Good credit scores get dramatically lower PMI rates
• Home appreciation can help you reach 80% LTV faster
• PMI is generally cheaper than FHA MIP for borrowers with 680+ credit

PMI Cost Breakdown

Your PMI rate depends primarily on your credit score and down payment:

Credit Score	5% Down	10% Down	15% Down
760-850	0.30%	0.25%	0.19%
720-759	0.41%	0.33%	0.26%
680-719	0.63%	0.54%	0.46%
640-679	0.93%	0.76%	0.59%
620-639	1.15%	0.92%	0.72%

For a $300,000 loan with 5% down and a 720 credit score, annual PMI would be approximately $1,230 ($103/month).

How to Remove PMI

There are several paths to eliminating PMI:

Automatic Cancellation: Your lender must cancel PMI when your balance hits 78% of the original value. For a $300,000 home with 5% down, this happens roughly 8-9 years into a 30-year mortgage.

Request at 80% LTV: You can request PMI removal once you reach 80% LTV through payments alone.

Appreciation-Based Removal: If your home has appreciated, you can get a new appraisal and request removal if the current LTV is below 80%.

Refinancing: If rates are favorable, refinancing into a new loan at 80% LTV or below eliminates PMI.

PMI vs FHA MIP: A Cost Comparison

The biggest advantage of conventional PMI is that it goes away. Compare:

• Conventional PMI: Cancels at 78% LTV (~8-9 years), costs 0.3-1.15% for good credit borrowers
• FHA MIP: Lasts entire loan term (with <10% down), costs 0.55% regardless of credit

See our detailed FHA MIP vs Conventional PMI comparison for side-by-side cost analysis.

When PMI Makes Sense

Even with the extra cost, PMI on a conventional loan can be worth it when:

• You have good credit (680+) and qualify for low PMI rates
• You plan to stay in the home long enough to reach 80% LTV
• Home values in your area are appreciating
• You want to avoid FHA’s lifetime mortgage insurance

Use our FHA vs Conventional Calculator to see which option saves you more money, and read our conventional loan requirements guide for qualification details.