How to Avoid PMI: 6 Ways to Skip It Before You Buy

What PMI costs in 2026 — and why it is worth avoiding

Private mortgage insurance is a policy you pay for that protects your lender. The CFPB’s PMI explainer is blunt: on a conventional loan with less than 20% down, PMI is usually required — and it insures the lender, not you.

On a typical loan it runs $150 to $200 a month — see our PMI cost breakdown. Here, $180 a month on $320,000 is 0.675% a year; held to automatic termination (about 10 years), that is $21,420 gone. Already closed? See how to remove PMI from your mortgage.

1. Put 20% down: the simplest, cheapest route

No tricks, no fees. On a $400,000 home, $80,000 down leaves a $320,000 loan at 7.28% costing $2,189 a month — no PMI, full stop. With 10% down: $2,463 plus $180 PMI, or $2,643 a month — a $454 monthly gap, $5,444 a year.

Two caveats: it only counts if an emergency fund and closing costs survive the $80,000 — and three more years renting at $1,800 a month costs more than paying PMI now.

2. Take a piggyback loan: the 80-10-10

A piggyback stacks two loans so the first sits at exactly 80% of the value — where PMI disappears. The classic 80-10-10: 10% down ($40,000), an 80% first ($320,000), a 10% second ($40,000).

The maths: the first at 7.28% costs $2,189 a month; the second, a 15-year fixed at 9.5%, costs $418 a month — $2,607 combined (blended ~7.53%). Against $2,643 with PMI, that saves about $36 a month — more after year 15, when the second loan is gone.

A real but modest early win — and seconds are often adjustable HELOCs with two payments to juggle. Have your lender quote both structures, then compare on our mortgage calculator.

3. Choose lender-paid PMI: a higher rate instead of a monthly bill

With lender-paid mortgage insurance (LPMI), the lender pays the PMI premium at closing — and you repay them through a permanently higher rate, typically +0.25%. Your statement never mentions mortgage insurance.

On $320,000: 7.53% versus 7.28% costs $2,244 versus $2,189 — about $55 a month extra, forever, against $180 a month of PMI that drops off around year 10. Totals: LPMI roughly $19,650 over 30 years; monthly PMI to auto-termination about $21,420.

The catch is “forever.” Monthly PMI can be killed early with extra payments or rising values; the LPMI bump only dies in a refinance. It suits long-term holders and high PMI quotes. If you might refinance soon, monthly PMI wins.

4. Pay single-premium PMI: one upfront payment, no monthly drag

Single-premium PMI pays the whole insurance cost at closing — typically 0.5% to 1.5% of the loan, about $3,200 on $320,000. Against $180 a month, breakeven is about 18 months. After that: nothing.

The cheapest low-down-payment route if you have the cash and will stay 2+ years — and it does not raise your rate or payment, which helps your debt-to-income ratio. The risk: premiums are generally non-refundable.

5. Use a VA loan: no PMI, ever

For eligible veterans, active-duty members and some surviving spouses, VA loans pair no down payment with no monthly mortgage insurance — per the VA’s home loan program.

The price is a one-time funding fee: 2.15% for first use under 5% down ($8,600 on a $400,000 purchase), 1.5%/1.25% with 5%/10%+ down, 3.3% on later use — financeable and waived for service-connected disabilities (see the VA’s funding-fee page). Financed, $408,600 at 7.28% costs about $2,796 a month with zero down.

6. Use a USDA loan: no PMI, guarantee fees instead

USDA loans offer 0% down in eligible rural areas — a label covering far more suburbs than buyers expect. Instead of PMI: a 1% upfront guarantee fee (~$4,000, financeable) plus 0.35% a year — roughly $117 a month in year one, shrinking as the balance falls (per a 2026 USDA loan guide).

Usually far cheaper than PMI. The limits: income generally capped at 115% of the area median, 30-year fixed only, primary residence.

The six strategies, side by side

Strategy	Cash needed	Monthly cost	Best for	Watch out
20% down	$80,000	$2,189 P&I, no PMI	Savers with reserves	$80k tied up in the house
80-10-10 piggyback	$40,000	$2,607 for 15 yrs, then $2,189	10% saved, solid credit	Second rate often adjustable
Lender-paid PMI	$0 extra	+$55 forever, no separate bill	Long-term holders	Rate hike never drops off
Single-premium PMI	~$3,200	$0	Cash-rich, staying 2+ years	Non-refundable if you sell early
VA loan	2.15% funding fee	$0 PMI	Eligible veterans	Fee unless disability-exempt
USDA loan	1% fee (financable)	~0.35%/yr annual fee	Eligible-area buyers	115% area-median income cap

Already bought? Here is how to remove PMI later

Everything above is for buyers who have not closed. Already own with PMI? Request cancellation at 80% loan-to-value, automatic termination at 78%, or refinance — the full playbook: how to remove PMI from your mortgage.