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What Is PMI and How Do You Get Rid of It?
Dated: December 1 2025
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What Is PMI and How Do You Get Rid of It?
By Alzira Escobar-Pruitt, REALTOR® | RE/MAX Real Estate Group
PMI is one of the most misunderstood parts of buying a home. Many buyers hear the term, know it adds to their monthly payment, but aren’t totally sure what it is or how to remove it. The good news is that PMI doesn’t last forever and, in many cases, you can eliminate it faster than you think.
Here is everything you need to know about what PMI is, why it exists, and how you can get rid of it as quickly as possible.
What Is PMI?
PMI stands for Private Mortgage Insurance.
It is insurance that protects the lender if the borrower stops making payments. PMI is required on most conventional loans when the buyer puts less than 20 percent down.
While PMI benefits the lender, it helps buyers by allowing them to purchase a home sooner without needing a full 20 percent down payment.
How Much Does PMI Cost?
PMI is typically added to your monthly mortgage payment.
The cost depends on
• Your credit score
• Your loan amount
• Your down payment
• Your loan type
Most buyers pay between 0.3 percent and 1.5 percent of the original loan amount per year.
When Can You Get Rid of PMI?
The great news is that PMI does not have to stay on your loan forever. There are several ways to remove it.
Request PMI Removal When You Reach 20 Percent Equity
Once you have 20 percent equity in your home, you can request that your lender remove PMI.
Equity can come from:
• Paying down your loan balance
• Rising home values
• Renovations that increase value
Your lender may require an appraisal to confirm current value.
Automatic PMI Removal at 22 Percent Equity
By law, lenders must automatically remove PMI once your loan balance reaches 78 percent of the original value, or when you reach 22 percent equity, as long as your payments are current.
Refinance to Remove PMI
If interest rates have improved or your home value has increased significantly, refinancing may eliminate PMI faster.
This works if your new loan balance is below 80 percent of the home’s current value.
Refinancing can also lower your interest rate or monthly payment.
Make Extra Payments to Build Equity Faster
Even small additional payments toward your principal can help you reach 20 percent equity more quickly.
Applying bonuses, tax refunds, or small monthly add-ons can shorten the time you pay PMI.
Leverage Home Appreciation
If home values in your area have increased, you may already have more equity than you think.
An appraisal or comparative market analysis can show whether you’ve hit the 20 percent threshold needed to remove PMI.
Improve Your Credit Score
If your credit has improved significantly since you purchased your home, refinancing into a new loan with better terms may help remove PMI and reduce your monthly payment.
Why Getting Rid of PMI Matters
Removing PMI lowers your monthly mortgage payment and improves your long-term financial health.
For many homeowners, eliminating PMI saves hundreds or even thousands of dollars per year.
Final Thoughts
PMI is a helpful tool that makes it possible to buy a home without a large down payment. But it is not permanent. With strategic planning, rising home values, or refinancing options, you can remove PMI sooner than expected and lower your monthly costs.
If you want help determining whether you can remove PMI on your current home or want guidance on building equity faster, I would be happy to assist you.
Click here to schedule a free no-obligation consultation!
Click here to learn about the author!
Alzira Escobar-Pruitt, REALTOR® | SRES® | RE/MAX Real Estate Group
Serving Colorado Springs, Monument, Fountain, Pueblo West & surrounding areas
Direct: 719-210-9848
Email: alzira@alzirarealtor.com
Website: www.AlziraProperties.com
Alzira Escobar-Pruitt
From Southern Spain to the heart of Colorado, Alzira Escobar Pruitt has become one of the most trusted and culturally connected REALTORS® in the Pikes Peak region, serving clients from all Spanish sp....
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