Mortgage · PMI Costs

What Does PMI Really Cost Each Month on a Conventional Loan?

There's no single 'average' PMI bill because your rate depends on your credit, your down payment, and your loan. Here's the actual cost range, a labeled example you can run with your own numbers, and the federal rule that eventually ends the charge whether you act or not.

Why 'average PMI' is the wrong question to ask

If you're paying private mortgage insurance (PMI, a policy that protects your lender if you stop paying your mortgage, not you) every month, you already know it adds real money to your payment. Search for the 'average' cost and you'll find numbers that swing wildly from one source to the next. That's because there isn't one PMI payment. There's a range, and where you land in it depends on your credit score, your down payment, and the loan you were underwritten for.

The Consumer Financial Protection Bureau puts typical PMI cost at between 0.5% and 1.5% of your original loan amount per year, usually billed to you in monthly installments folded into your regular mortgage payment. That range is wide on purpose: private mortgage insurers set their own rates loan by loan, and the government doesn't fix a single price.

This article walks through what that percentage range looks like in real monthly dollars, what pushes a given borrower toward the low or high end, and the federal rule that puts a firm expiration date on the charge, whether you ask for it or not.

A labeled example: turning the percentage range into a monthly number

Percentages are hard to picture, so here's a labeled illustration using round, made-up numbers, not a real loan.

• Borrow $300,000 at a PMI rate of 0.5% per year: that's $1,500 a year, or about $125 a month.
• Borrow the same $300,000 at a PMI rate of 1.5% per year: that's $4,500 a year, or about $375 a month.
• A borrower with strong credit and a down payment closer to 15% or 20% typically lands nearer the lower end of that range than a borrower putting down the minimum.

The gap between those two outcomes is the whole point. Two people can borrow the exact same amount and pay very different monthly amounts for PMI, which is why any single 'average' figure flattens out information that actually matters for your budget.

What actually pushes your rate toward one end of that range

PMI pricing isn't random. Insurers weigh a handful of factors when they set your rate, and the same factors underwriters check when they approve your loan in the first place.

• Your credit score: lower scores generally mean higher perceived risk, and higher PMI pricing.
• Your loan-to-value ratio, or LTV (how much you're borrowing compared with the home's value): a 15% down payment usually prices better than a 5% down payment.
• Your loan type: fixed-rate loans typically price differently than adjustable-rate loans.
• The coverage amount your lender requires, which follows investor guidelines like those published by Fannie Mae and Freddie Mac for loans sold into their programs.

None of these factors are things a PMI calculator can guess for you from the outside. They're set at origination based on your actual file, which is another reason a national 'average' doesn't map cleanly onto your bill.

The federal rule that puts an expiration date on this cost

PMI on most conventional loans isn't permanent, and that's by law, not lender goodwill. The Homeowners Protection Act (a federal law that governs when PMI must be cancelled or terminated on residential mortgages) sets two paths off this cost.

First, you can request cancellation once your loan balance is scheduled to reach 80% of the home's original value, as long as you're current on payments and meet your lender's conditions. Second, PMI must terminate automatically once your balance is scheduled to hit 78% of the original value, even if you never send a letter. The CFPB explains both triggers in detail, and the underlying statute sits in the U.S. Code compiled at govinfo.gov.

This matters for the 'average cost' question because your real average over the life of the loan isn't the monthly figure you're paying today. It's that monthly figure multiplied by however many months remain until one of these two triggers hits, which is a number you can actually calculate for your own loan.

Finding your own number instead of guessing at an average

Your loan estimate, closing disclosure, or annual escrow statement will show your actual PMI premium, which is a far more useful number than any national average. If you don't have those documents handy, your loan servicer's statement or online account usually itemizes it separately from principal and interest.

From there, you can check where you stand against the 80% and 78% thresholds using the free PMI Cancellation Checker, work through the full process with the complete PMI cancellation playbook, and if you're ready to request removal, start from the free cancellation letter template. This is not financial or lending advice; it's a way to see the math on your own loan before you talk to your servicer or a licensed advisor about your specific numbers.

What these figures can't tell you

The CFPB's 0.5% to 1.5% range is a general guide, not a quote. It won't tell you your exact premium, and it doesn't cover every structure. Some loans use lender-paid PMI, where the cost is built into a slightly higher interest rate instead of a separate line item, which changes the math entirely.

This article also only covers conventional loans with private PMI. Loans insured through the Federal Housing Administration use a different federal insurance program with its own premium structure, administered under HUD, and the Homeowners Protection Act's automatic termination rules don't apply to it the same way. If your loan isn't a standard conventional mortgage, check your loan documents or ask your servicer which insurance program actually applies before assuming any of the numbers above describe your situation.

Questions people ask

Is PMI included in my monthly mortgage payment?
Usually, yes. Most lenders escrow PMI along with principal, interest, taxes, and homeowners insurance into one combined monthly payment. Some loans instead charge PMI as an annual premium or a single upfront payment, so check your closing disclosure to see how yours is structured.

Does PMI cancel automatically or do I have to request it?
Both paths exist. You can request cancellation once your balance is scheduled to reach 80% of the home's original value, and it must terminate automatically at 78%, under the rules the CFPB explains here. Automatic termination happens without a letter, but requesting early cancellation requires you to reach out first.

Can my PMI cost go down if my home's value went up?
In some cases, yes, if your lender allows cancellation based on current value rather than the original schedule, often supported by a new appraisal. This isn't guaranteed on every loan, so review your servicer's specific requirements rather than assuming it applies automatically.

Is PMI the same as FHA's mortgage insurance premium (MIP)?
No. PMI applies to conventional loans and is provided by private insurers. FHA loans use a separate federal insurance program called MIP, administered through HUD, with different rules about how long the premium lasts and whether it can be cancelled.

Sources

1. govinfo.gov: U.S. Code and Public Laws (Homeowners Protection Act of 1998)
2. HUD: FHA Loan Programs and Insurance
3. Fannie Mae: Single-Family Mortgage Insurance Requirements
4. Freddie Mac: Single-Family Mortgage Insurance Guidelines

This article is educational and is not financial or lending advice. Some links in our articles may earn us a commission at no cost to you, and never change what we recommend.