On a $400,000 home purchase with 5% down, the loan amount is $380,000. At an illustrative PMI rate of 0.60% per year, monthly PMI is $190: $380,000 × 0.006 ÷ 12. Over five years, that is $11,400 if the premium stays unchanged. Raise the down payment to 10%, and the loan falls to $360,000; if the PMI rate improves to 0.35%, the monthly cost becomes $105. That is an $85 monthly difference, or $5,100 over five years. The best ways to lower PMI are usually decided before closing, when your down payment, credit profile, loan structure, and broker comparison options are still flexible.
Duane Buziak, NMLS #1110647
Table of Contents
- Know what drives your PMI quote
- Put more money down when it makes sense
- Improve your credit before final approval
- Compare conventional options with a broker
- Consider a piggyback second mortgage carefully
- Use an appraisal to request PMI removal
- Refinance when the math supports it
- Compare the cost of alternatives
- Frequently asked questions
Know what drives your PMI quote
Private mortgage insurance, or PMI, generally applies to conventional financing when the down payment is under 20%. It protects the mortgage investor if the borrower defaults. It does not build equity for the homeowner, which is why a lower premium can matter.
Your PMI quote is primarily based on loan-to-value ratio, credit score, occupancy, loan type, and coverage level. A borrower with a 760 score and 10% down will commonly price differently than a borrower with a 680 score and 5% down, even when both buy the same home. Exact premiums are set by the mortgage insurance provider and can be monthly, upfront, or financed into the rate.
For context, the 2025 one-unit conforming baseline was $806,500 in most counties, while designated high-cost counties could reach $1,209,750. Those limits affected eligible conventional financing in Duane’s licensed states, including Virginia, Florida, Tennessee, Georgia, Washington, D.C., North Carolina, South Carolina, and Maryland. Confirm the current county limit through the FHFA conforming loan limit data before relying on a figure, since limits are updated annually.
National mortgage pricing changes weekly. Before judging whether a refinance or lender-paid option makes sense, review the latest 30-year fixed-rate survey from Freddie Mac’s Primary Mortgage Market Survey. A rate is only useful when it is tied to the date, loan scenario, points, and fees behind it.
1. Put more money down when it makes sense
A larger down payment is the clearest route to a lower PMI premium because it reduces the loan-to-value ratio. Moving from 5% down to 10% down can reduce both the loan balance and the insurance factor. Reaching 20% down generally eliminates borrower-paid PMI at closing on a conventional loan.
That does not mean every buyer should drain savings to avoid PMI. Keeping reserves can be wiser than putting every available dollar toward the down payment. A practical reserve target varies by scenario, but many conventional files become stronger with two to six months of total housing payments in verified reserves. Investment-property and jumbo scenarios may require more.
Compare the marginal benefit. In the worked example, putting an additional $20,000 down reduced the projected five-year PMI cost by $5,100, but it also placed $20,000 into the home immediately. The decision depends on cash reserves, expected time in the property, and whether that cash has a better near-term use.
2. Improve your credit before final approval
Credit scores can materially affect PMI pricing. For many conventional programs, a 620 score is a common minimum threshold, while stronger pricing often begins around 680 and improves further around 740 or 760. A higher score does not guarantee a specific premium, but it can reduce the risk adjustment behind the quote.
Avoid opening new accounts, financing furniture, or carrying unusually high card balances while preparing to buy. Paying revolving balances down before the statement date may improve utilization, but do not close older accounts merely to chase a score. Your broker can help model whether waiting for an updated score is likely to offset the cost of delaying a purchase.
3. Compare conventional options with a broker
PMI is not a stand-alone number. One conventional option may offer a lower rate with higher monthly PMI, while another has a slightly higher rate and lower insurance cost. The only useful comparison is the full payment, cash to close, and projected break-even period.
A soft pull mortgage comparison can help you review available structures before a hard inquiry is necessary. FreeMortgageSearch.com uses a no-hard-inquiry mortgage pre-approval approach to help eligible shoppers compare scenarios without making the credit check itself the first irreversible step.
| Comparison point | Broker with wholesale access | Single-shelf pricing model |
|---|---|---|
| Available programs | Can compare multiple wholesale program menus | Limited to that company’s available menu |
| PMI structures | Can review monthly, single-premium, and rate-based alternatives where available | Options depend on the company’s internal offerings |
| Pricing review | Compares rate, PMI, points, and fees across options | Reviews pricing from one shelf at a time |
| Credit-first workflow | May begin with a soft-pull comparison when eligible | Process and inquiry method vary by company |
| Best use case | Buyers who want to test more than one structure | Buyers who prefer a single company’s process |
This is a structural comparison, not a claim that one path fits everyone. National direct companies and retail mortgage companies can offer useful in-house processes. A broker comparison is most valuable when PMI is a meaningful part of the payment and the buyer wants to see how competing program structures change the math.
4. Consider a piggyback second mortgage carefully
A piggyback structure combines a first mortgage with a smaller second mortgage to keep the first-mortgage loan-to-value ratio at 80% or less. For example, an 80-10-10 arrangement uses 80% first mortgage financing, 10% second mortgage financing, and 10% down.
This can avoid monthly PMI, but it does not make financing free. Second mortgages often carry a higher rate, may adjust after an introductory period, and create another payment. Compare the combined first and second payments against the conventional payment with PMI, including closing costs. A no-out-of-pocket closing option can also carry a trade-off through the interest rate or other pricing adjustments.
5. Use an appraisal to request PMI removal
If you already own the home, appreciation and principal reduction can create a path to PMI removal. Under federal rules for many covered conventional mortgages, borrowers may request cancellation when the principal balance is scheduled to reach 80% of the home’s original value, subject to payment-history and other requirements. Automatic termination generally occurs at 78% of original value if the loan is current. The Consumer Financial Protection Bureau’s PMI guidance explains these protections.
For a property that has appreciated, the servicer may require a new appraisal or broker price opinion and may impose seasoning requirements. Ask for its written cancellation policy before paying for an appraisal. On a $380,000 original loan, getting to 80% of the original $400,000 value means a balance of $320,000. Appreciation may help, but the rules are often stricter than simply dividing your current balance by a new estimated value.
6. Refinance when the math supports it
Refinancing can eliminate PMI if the new loan is at or below 80% of the current appraised value. A homeowner who owes $300,000 on a home appraised at $400,000 has a 75% loan-to-value ratio, which may support a conventional refinance without PMI.
But refinancing has costs. Typical closing costs can range from roughly 2% to 5% of the new loan amount, depending on points, title charges, prepaid items, and location. On a $300,000 refinance, that is $6,000 to $15,000 before any credits. If removing $190 in PMI saves $2,280 per year, a $6,000 cost takes about 32 months to recover before considering the new rate and payment.
Veterans with eligible VA entitlement may have another route because VA financing does not charge monthly mortgage insurance, although a VA funding fee may apply. Review eligibility and current fee details directly with the U.S. Department of Veterans Affairs home loan program.
7. Do not confuse PMI with every mortgage insurance charge
FHA financing uses mortgage insurance premiums rather than conventional PMI. Depending on the case, FHA insurance may remain for the life of the loan, making it especially important to compare the long-term plan before choosing that route. FHA can still be appropriate for certain credit profiles or down-payment situations, but it should be evaluated against conventional options, not assumed to be cheaper.
The simple question is not, “How do I avoid PMI?” It is, “Which available structure has the best total cost and risk profile for my timeline?” Sometimes paying PMI briefly is less expensive than waiting months to save a larger down payment or accepting a higher rate.
Frequently Asked Questions About Ways to Lower PMI
Can I remove PMI once I reach 20% equity?
Often, yes. For many conventional mortgages, you can request cancellation at 80% of the original value if you meet payment-history and servicer requirements.
Is 20% down required to buy a home?
No. Conventional financing may allow lower down payments, but PMI usually applies below 20% down.
What credit score helps lower PMI?
A 740 or 760 score often receives stronger pricing than a 620 or 680 score, though PMI pricing also depends on down payment and loan details.
Can an appraisal remove PMI early?
Possibly. A new appraisal may support removal based on appreciation, but servicer seasoning rules and payment history still apply.
Is lender-paid mortgage insurance cheaper?
It can reduce the visible monthly PMI line, but it commonly comes with a higher interest rate. Compare the full payment and total interest.
Can I refinance to remove PMI?
Yes, if the new loan-to-value ratio supports it and the savings outweigh closing costs and any rate change.
Does a VA loan have PMI?
No monthly PMI is charged on VA loans, though an upfront funding fee may apply unless the borrower is exempt.
Can I compare PMI options without a hard inquiry?
Eligible buyers in Virginia, Florida, Tennessee, Georgia, Washington, D.C., North Carolina, South Carolina, and Maryland may begin with a soft-pull comparison before moving to a full application.
A lower PMI payment is useful, but the right choice should also leave you with enough cash, a payment you can sustain, and a clear plan for how long you expect to keep the mortgage.
Legal disclaimer: This article is educational information, not legal, tax, credit, insurance, or financial advice and not a commitment to extend credit. Loan terms, mortgage insurance, rates, fees, eligibility, and approval requirements can change and depend on verified borrower and property information. Coast2Coast Mortgage, LLC and Duane Buziak originate residential mortgage loans only in VA, FL, TN, GA, DC, NC, SC, and MD. North Carolina consumers may verify licensing through NMLS Consumer Access.
Duane Buziak | Mortgage Maestro | NMLS #1110647 | Coast2Coast Mortgage, LLC NMLS #376205 | Licensed in VA, FL, TN, GA, DC, NC, SC, MD | (804) 212-8663 | duane@coast2coastml.com | NoTouch Credit Pull available — no hard inquiry, no credit hit.
