When PMI applies
PMI is most commonly associated with conventional loans at less than 20% down. FHA loans have their own Mortgage Insurance Premium (MIP) with different rules. VA loans have no monthly mortgage insurance for eligible borrowers. USDA has its own annual fee.
How PMI is priced
Pricing depends on credit, loan-to-value, loan type, and occupancy. It can be paid monthly, in a one-time upfront premium (lump-sum), split (some upfront / some monthly), or lender-paid (built into a slightly higher rate).
Removing PMI on a conventional loan
Under HPA (Homeowners Protection Act), borrower-paid PMI automatically terminates at 78% LTV (based on original value), can be requested at 80% LTV with on-time payment history, and is reviewed at 80% LTV after property value increases via appraisal. Program-specific rules apply.
Refinancing to drop PMI
If equity has grown enough (through paydown, value appreciation, or improvements) a refinance can eliminate PMI even when the existing servicer won't remove it. We'll model whether the refi cost is justified.