2026-10-21 · 4 min read · Orange County

What Is Private Mortgage Insurance, and How Do I Get Rid of It?

The short answer

Private mortgage insurance, or PMI, is usually required on a conventional loan when you put less than 20 percent down. It protects the lender, not you. You can ask to cancel it once your loan balance reaches 80 percent of your home's original value, and it generally ends on its own at 78 percent if you are current on payments. FHA loans use a different kind of mortgage insurance with its own rules.

What Is PMI, and Why Would I Have to Pay It?

What is private mortgage insurance when you buy your first home in Orange County? It is insurance that protects your lender if you stop making payments, and it usually comes with a conventional loan when your down payment is under 20 percent.

I'm Jeanette Nelson, a REALTOR® with Jeanette Nelson Real Estate, Keller Williams Realty, serving Orange County, Huntington Beach, Costa Mesa, Fountain Valley, and surrounding areas. Many first-time buyers I talk with assume they need 20 percent down to buy. PMI is one of the tools that lets many people buy sooner with less.

The Consumer Financial Protection Bureau (CFPB) is clear that PMI protects the lender, not you. It does not stop a foreclosure if you fall behind. You may also be required to have PMI when you refinance a conventional loan with less than 20 percent equity.

How Do I Pay for PMI?

The CFPB describes three common ways:

Monthly. The most common choice. The premium is added to your mortgage payment.
Up front. A one-time premium paid at closing.
A mix of both. Part at closing and part monthly.

You will see the cost on your loan papers. On your Loan Estimate and Closing Disclosure, the monthly premium is on page 1 in the Projected Payments section. An up-front premium is on page 2 in section B.

Ask more than one lender to show you the PMI cost side by side.

When Can I Get Rid of PMI?

This is the good part. The CFPB explains three ways PMI ends on a conventional loan for a single-family home you live in, for loans that closed on or after July 29, 1999.

You can ask at 80 percent. Once your balance reaches 80 percent of your home's original value, you can ask your servicer in writing to cancel it. Your PMI disclosure form shows the first date you can ask. If you pay extra toward principal, you can reach that point sooner.
It ends automatically at 78 percent. Even if you never ask, your servicer generally must end PMI when your balance is scheduled to reach 78 percent of the original value, as long as you are current on payments.
It ends at the halfway point. PMI ends the month after you reach the midpoint of your loan schedule, even if you haven't hit 78 percent. On a 30-year loan, that's after 15 years.

"Original value" means the lower of your purchase price or the appraised value when you bought.

What Do I Need to Qualify for Removal at 80 Percent?

The CFPB lists the conditions for a cancellation request:

A good payment history and being current on your payments.
No second loans on the home, such as a second mortgage or home equity line.
Proof the value hasn't dropped, such as an appraisal, if your servicer asks for it.

When you meet the conditions, the CFPB says your servicer is legally required to grant the request. Fannie Mae and Freddie Mac can set their own rules, yet those rules can't be less favorable to you than the federal rules.

How Is FHA Mortgage Insurance Different?

FHA loans don't use PMI. They use FHA mortgage insurance, often called MIP, and the CFPB says the FHA rules for ending it are different, so check with your servicer.

According to HUD's model disclosure for FHA loans:

There is an up-front premium. It is usually added into your loan amount.
There is also a monthly premium. It lasts for the first 11 years if your original loan-to-value was 90 percent or less, which generally means you put at least 10 percent down.
With less than 10 percent down, the monthly premium lasts for the life of the loan, up to 30 years.

Some FHA buyers later look at refinancing once they have more equity. That is a question for your lender at the time.

This is general information, not lending advice. A lender can compare a conventional loan with PMI and an FHA loan using your real numbers.

For more planning help, see how much to save for your first home and what you'll pay at closing.

Let's Start With a Conversation

If you are wondering whether to wait for 20 percent down or buy sooner with PMI, I'd love to talk it through with you. We can look at your timeline and connect with a lender so you see real numbers before you decide. Call or text me at 714.366.8575 | DRE: 01397168, or contact me. Jeanette Nelson is a REALTOR® with Jeanette Nelson Real Estate, Keller Williams Realty, serving Orange County, Huntington Beach, Costa Mesa, Fountain Valley, and surrounding areas.

Frequently asked questions

Do I need 20 percent down to buy a home?

No. Many loans allow less. With a conventional loan and less than 20 percent down, you will usually pay PMI until you reach the removal points.

Will PMI come off by itself?

On a conventional loan, generally yes. The CFPB says your servicer must end it when your balance is scheduled to reach 78 percent of the original value, if you are current on payments.

Can I remove PMI sooner if my home goes up in value?

The federal 80 and 78 percent rules are based on your home's original value. Some servicers have their own rules about new appraisals, so ask your servicer what they allow.

Does FHA mortgage insurance ever go away?

It depends on your down payment. HUD's disclosure shows the monthly premium lasts 11 years when your original loan-to-value was 90 percent or less, and up to 30 years when it was higher.

Does PMI protect me if I lose my job?

No. The CFPB says PMI protects the lender, not you, and it does not stop a foreclosure.