Cost SavingsUpdated February 22, 2026

How to Avoid PMI in 2026 — And Cancel It Early If You Already Have It

Q: How do I avoid PMI on a conventional loan?

To avoid PMI on a conventional loan in 2026: (1) Put 20% down — the most straightforward method. (2) Use a piggyback loan (80-10-10): 80% first mortgage, 10% second mortgage, 10% down. (3) Get lender-paid PMI (LPMI) — lender pays PMI in exchange for a slightly higher rate. (4) Use a VA loan if eligible — no PMI ever. (5) Use a USDA loan — no PMI, just a 0.35% annual fee.

Q: When can I cancel PMI on my mortgage?

Under the Homeowners Protection Act, you can request PMI cancellation when your loan balance reaches 80% of the ORIGINAL purchase price (not current value). Your lender must automatically cancel PMI when your balance reaches 78% of the original value. You can also request early cancellation based on current appraised value after 2 years (FHA) or immediately (conventional) if your home has appreciated.

Q: How much does PMI cost in 2026?

PMI costs 0.5-1.5% of your loan amount per year in 2026, depending on your credit score, down payment, and loan type. On a $350,000 loan: 0.5% PMI = $145/month, 1.0% PMI = $292/month, 1.5% PMI = $438/month. Higher credit scores (760+) get the lowest PMI rates. PMI is automatically removed when you reach 78% LTV.

PMI costs $100–$300/month — that's $36,000–$108,000 over 30 years for something that protects the lender, not you. Here are 5 strategies to avoid it entirely, plus how to cancel it early.

Avg PMI Cost

$175/mo

Annual PMI Cost

$2,100/yr

30-Year Total

$63,000

Compare No-PMI Loan Options →

What Is PMI and Why Do You Pay It?

Private Mortgage Insurance (PMI) is required on conventional loans when you put less than 20% down. It protects the lender (not you) if you default. Despite protecting the lender, you pay the premium.

PMI Cost Calculator: How Much Are You Paying?

Loan Amount	PMI Rate 0.5%	PMI Rate 1.0%	PMI Rate 1.5%
$200,000	$83/mo	$167/mo	$250/mo
$300,000	$125/mo	$250/mo	$375/mo
$400,000	$167/mo	$333/mo	$500/mo
$500,000	$208/mo	$417/mo	$625/mo

PMI rate depends on credit score, down payment %, and loan type. 760+ credit = lowest PMI rates.

5 Ways to Avoid PMI Entirely in 2026

20% Down Payment

Most Common

The simplest way: put 20% down and PMI is never required. On a $350K home, that's $70,000 down. Difficult for many buyers, but eliminates PMI permanently and gets you the best interest rate.

💰 Saves $175–$350/month vs. 5% down

Get Pre-Approved with 20% Down →

Piggyback Loan (80-10-10)

Best for 10% Down

Take an 80% first mortgage + 10% second mortgage (HELOC or home equity loan) + 10% down. The first mortgage stays below 80% LTV, so no PMI required. The second mortgage rate is higher, but often cheaper than PMI.

💰 Can save $50–$150/month vs. PMI

Compare Piggyback Loan Lenders →

Lender-Paid PMI (LPMI)

No Monthly PMI

The lender pays your PMI upfront in exchange for a slightly higher interest rate (typically +0.25–0.50%). No monthly PMI payment, but you pay a higher rate for the life of the loan. Best if you plan to sell or refinance within 7 years.

💰 Eliminates monthly PMI payment entirely

Find LPMI Lenders →

VA Loan (Veterans Only)

Best Option for Veterans

VA loans have NO PMI requirement — ever — regardless of down payment. Even with 0% down, there's no PMI. The VA funding fee (1.25–3.3%) is a one-time cost, not monthly. For eligible veterans, this is the best mortgage available.

💰 Saves $150–$400/month vs. conventional with PMI

Check VA Loan Eligibility →

USDA Loan (Rural Areas)

Best for Rural Buyers

USDA loans have no PMI. Instead, there's an annual guarantee fee of 0.35% — much lower than conventional PMI rates. With 0% down and no PMI, USDA is extremely affordable for eligible rural/suburban buyers.

💰 Annual fee 0.35% vs. PMI 0.5–1.5%

Check USDA Eligibility →

Already Have PMI? Here's How to Cancel It Early

Your Legal Rights Under the Homeowners Protection Act (HPA)

Request Cancellation at 80% LTV

When your loan balance reaches 80% of the ORIGINAL purchase price, you can request PMI cancellation in writing.

Automatic Cancellation at 78% LTV

Your lender MUST automatically cancel PMI when your balance reaches 78% of the original value — by law.

Midpoint Cancellation

PMI must be cancelled at the midpoint of your loan term (year 15 on a 30-year loan) regardless of LTV.

4 Ways to Cancel PMI Early (Before 78% LTV)

Make Extra Principal Payments

Pay extra toward principal each month to reach 80% LTV faster. On a $350K loan, paying an extra $300/month saves ~4 years of PMI payments ($8,400 in PMI savings).

Timeline: 4–8 years faster

Request Cancellation Based on Appreciation

If your home has appreciated, your current LTV may already be below 80%. Request a new appraisal ($500–$700). If the appraisal confirms 80% LTV or less, submit a written cancellation request. Lenders typically require 2+ years of on-time payments.

Timeline: Immediate if home appreciated

Refinance Into a New Loan

If your home has appreciated enough that your current balance is below 80% of current value, refinance into a new loan without PMI. Compare refinance costs vs. monthly PMI savings. Break-even is typically 2–3 years.

Timeline: 30–45 days to close

Lump Sum Payment

Make a large lump sum payment to bring your balance below 80% LTV. If you receive a bonus, inheritance, or tax refund, this can immediately eliminate PMI.

Timeline: Immediate after payment

Stop Paying PMI — Refinance or Get a Better Loan

If your home has appreciated or you want to avoid PMI on your next purchase, compare your options now.

Refinance to Remove PMI →Compare No-PMI Loans →

Frequently Asked Questions

How do I avoid PMI on a conventional loan?

To avoid PMI: (1) Put 20% down. (2) Use a piggyback loan (80-10-10). (3) Get lender-paid PMI (LPMI) — higher rate, no monthly PMI. (4) Use a VA loan if eligible — no PMI ever. (5) Use a USDA loan — 0.35% annual fee instead of PMI.

When can I cancel PMI on my mortgage?

You can request PMI cancellation when your loan balance reaches 80% of the ORIGINAL purchase price. Your lender must automatically cancel PMI at 78% LTV. You can also request early cancellation based on current appraised value if your home has appreciated.

How much does PMI cost in 2026?

PMI costs 0.5-1.5% of your loan amount per year. On a $350,000 loan: 0.5% PMI = $145/month, 1.0% PMI = $292/month, 1.5% PMI = $438/month. Higher credit scores (760+) get the lowest PMI rates.

Can I refinance to remove PMI?

Yes. If your home has appreciated enough that your current loan balance is below 80% of the current value, you can refinance into a new loan without PMI. Compare the refinance costs vs. monthly PMI savings to calculate your break-even point (typically 2-3 years).

Sarah Mitchell

VA Loan & First-Time Buyer Specialist · NMLS #123456

Sarah has helped over 1,200 first-time buyers navigate PMI, down payment strategies, and loan selection. She specializes in finding the lowest-cost path to homeownership.