How to remove PMI from a mortgage?

Borrowers need to pay private mortgage insurance (PMI) on their conventional loan if they buy a home with less than a 20% down payment.

This protects the lenders in case borrowers default. You stop paying PMI once you reach 20% on your home equity . After this, you can request for the PMI to be canceled. If you don’t want to pay a PMI at all, you’ll need to make a down payment of at least 20%.

With a lender-paid PMI, you pay a higher interest rate on your monthly payments and so cannot cancel this type of PMI even if you reach 20% equity.

A PMI is different from a mortgage insurance premium (MIP) which is applied to Federal Housing Administration (FHA) loans. It works similarly to a PMI in that it protects lenders against default. But you need to pay MIP both at closing and each month. You pay an MIP throughout your loan term if you make a down payment of less than 10%. If you make a 10% down payment, you pay MIP for about 11 years.