Updated for 2026 • Mortgage Tips • 6 min read
When I got my first mortgage approval letter, I was excited. Then I looked at page 2.
There was a line item I didn't understand: PMI - $240.00 per month.
I called my loan officer. He said, "Oh that's just Private Mortgage Insurance. It's normal if you put less than 20% down."
Normal? It was $2,880 a year for nothing that helps me. That money doesn't go to my house. It doesn't lower my loan. It just protects the bank if I stop paying.
That day I decided I was not going to pay it.
What PMI Actually Is (In Plain English)
PMI stands for Private Mortgage Insurance. In the US, if you buy a house and you put less than 20% down, almost every lender will force you to pay it.
It's confusing because it's called insurance, but it's not home insurance. Home insurance protects YOU if your house burns, floods, or gets broken into.
PMI protects THE BANK.
How much does it cost? Usually 0.5% to 1.5% of your loan amount every year. So on a $340,000 loan like mine was, that was $240 a month. Some of my friends pay $350. It depends on your credit score and down payment.
The worst part? It doesn't go away automatically. A lot of people think it drops off. It does, but only after you have 20-22% equity, and you often have to ASK for it. Some people pay it for 8, 9, 10 years without knowing they could remove it.
The 3 Options My Lender Gave Me
I had $38,000 saved. The house was $380,000. That's 10% down. I needed another $38,000 to hit 20%.
My lender laid it out:
1. Wait two more years and save 20%. But rent where I live in Florida was $1,850 a month. Waiting 2 years would cost me $44,400 in rent just to avoid PMI. That made zero sense.
2. Take lender-paid PMI. He said, "We can pay the PMI for you if we raise your rate from 6.75% to 7.15%." I did the math. That 0.4% increase would cost me an extra $94 a month FOREVER, not just until I hit 20%. Over 30 years, that's $33,000. No thanks.
3. The one he almost didn't mention - the 80/10/10 piggyback loan. This is what I took.
How The 80/10/10 Saved Me $16,000
I had never heard of it before. My credit union explained it in 5 minutes.
Instead of one loan for 90%, you get two loans:
First mortgage: 80% of the price = $304,000 at 6.75%
Second mortgage: 10% of the price = $38,000 at 8.5%
My cash: 10% = $38,000
Because the first mortgage is exactly 80% of the home value, the bank can't charge PMI. It's the rule.
Yes, I had two payments. My first was about $1,972 and my second was $318. But here is the smart part - that second loan is small. I threw every extra dollar at it. Tax refund, bonus, side hustle money. I killed it in 34 months.
Total interest I paid on that second loan: $4,212.
If I had taken PMI at $240 a month for 7 years until I naturally hit 20% equity, I would have paid $20,160.
I saved $15,948. And that second loan is gone. PMI would have still been there.
⚠️ Don't miss this: After I fixed PMI, I found another fee my lender tried to hide. I wrote about it here → My Lender Added $12,000 in Closing Costs. Here's How I Got It Removed
What If You Already Pay PMI? How To Remove It
If you're reading this and you're already paying PMI, you can still remove it.
By US law, your servicer MUST drop PMI automatically when your loan balance hits 78% of your ORIGINAL purchase price. But you can request removal at 80%.
Here's what to do this week:
Step 1: Call your servicer and ask, "What is my current LTV and what do I need to request PMI removal?"
Step 2: If your home went up in value since 2021-2023, you might already be under 80%. Ask if you can get a new appraisal. It costs $400-$600, but it's worth it.
My friend Mike in Columbus bought at $320k in 2021. His house appraised at $395k in late 2025. He paid $450 for the appraisal, sent it to his lender, and they removed his $198 PMI in 18 days. That's $2,376 a year back in his pocket.
Don't wait for them to do it. They won't remind you.
And if you are a veteran, look at VA loans - they have zero PMI even with 0% down. If you put 10% down on a conventional to avoid PMI, a VA loan might still be cheaper.
Bottom line: PMI is not permanent. But you have to be the one to fight it.