On a Conventional loan, private mortgage insurance applies when your down payment is under 20% — that is, when your loan-to-value ratio exceeds 80%.

PMI doesn't protect you. It protects the lender against loss, and you pay for it. What it does do is let you buy without waiting to save a full 20%, which means the real comparison is between buying now with PMI and waiting several more years — and that answer depends on your market.

There are three ways out. First, paying down principal lowers your LTV; at one threshold you can request cancellation, and at a lower one it terminates automatically. Second, appreciation lowers your LTV; this route requires a new appraisal and carries seasoning requirements that vary by program. Third, refinancing clears it as part of a new loan.

You can also structure around it. Lender-paid PMI trades a slightly higher rate for no separate PMI charge. Single-premium PMI pays the cost once at closing instead of monthly. Which works best depends on how long you'll be in the home.

The most frustrating cases we see are borrowers still paying PMI years after they became eligible to drop it. Automatic termination runs off your original amortization schedule, so it doesn't account for appreciation at all. If your home value has risen, you have to ask. Before you commit, we'll show you how down payment size reshapes both your monthly cost and your PMI picture.