PMI protects the lender
You pay for it.
All tracks and lessons
Down payments and PMI
Less than 20% down usually means private mortgage insurance on a conventional loan — and it can be removed later.
In this lesson you will
- Know when PMI applies
- Know the 80% and 78% removal points
- Balance down payment against cash reserves
Private mortgage insurance (PMI) protects the lender, not you. Lenders generally require it on conventional loans when the down payment is less than 20% of the home’s price or appraised value (CFPB).
Removing PMI
- You can ask to cancel PMI when your balance is scheduled to reach 80% of the home’s original value.
- Your servicer generally must end it automatically when the balance is scheduled to reach 78%, if you are current on payments (CFPB).
Is 20% down always best?
A larger down payment lowers the loan, the payment and the interest. But emptying savings to reach 20% can leave no emergency fund or money for repairs. Some buyers put less down, pay PMI for a while and keep a cushion.
Other loan types
Government-backed loans have their own mortgage-insurance rules, which can last longer. Compare the full cost across loan types.
By the GetGuac team · Editorial policy
Three ideas to keep
It can end
80% by request, 78% automatically.
Do not empty savings
A home needs a cushion.
Do it in 4 steps
Price your target home
And 20% of it.
Keep an emergency fund separate
Plus a repair buffer.
Compare loan types
Including mortgage insurance.
Calendar the 80% date
And ask to cancel PMI.
When PMI can come off
Illustrative home with an original value of $350,000.
| Milestone | Balance |
|---|---|
| Down payment 10%: starting loan | $315,000 |
| 80% of original value — you can request cancellation | $280,000 |
| 78% of original value — automatic termination | $273,000 |
Paying principal down faster reaches the 80% point sooner.
Where this usually goes wrong
- Forgetting to request PMI cancellation
- Using the emergency fund for the down payment
- Ignoring mortgage insurance on other loan types
If you have PMI, find the balance that equals 80% of your home’s original value.
Tools and guides for this lesson
Quick quiz
1. PMI is usually required when the down payment is below…
2. You can ask to cancel PMI when the balance is scheduled to reach…
3. PMI protects…
0 of 3 answered
Puzzle
Original home value $280,000. At what balance can you request PMI cancellation, and when does it end automatically?
Show the answer
$224,000 request; $218,400 automatic
$280,000 × 0.80 = $224,000. × 0.78 = $218,400.