How PMI Works with a Conventional 97 Loan
Private Mortgage Insurance (PMI) is insurance for mortgage lenders, paid by the homeowner, that reimburses the lender for losses taken after a default.
Because Conventional 97 loans only require a 3% down payment, PMI is required until you reach 20% equity. Unlike FHA mortgage insurance, PMI is temporary — once you build enough equity, it can be removed.
See Loan Requirements for the full Conventional 97 eligibility rules.
How Much Does PMI Cost?
The cost of PMI varies based on your credit score, loan amount, and down payment percentage.
Borrowers with higher credit scores generally pay less for PMI. Here are the actual PMI rates for Conventional 97 loans:
| Credit Score Range | Annual PMI Rate (% of Loan Amount) | Monthly PMI on $300,000 Loan |
|---|---|---|
| 760+ (Excellent) | 0.55% | $137.50 |
| 740-759 (Very Good) | 0.69% | $172.50 |
| 720-739 (Good) | 0.76% | $190.00 |
| 700-719 (Good) | 0.90% | $225.00 |
| 680-699 (Fair) | 1.20% | $300.00 |
| 660-679 (Fair) | 1.65% | $412.50 |
| 640-659 (Fair) | 1.80% | $450.00 |
| 620-639 (Minimum) | 1.95% | $487.50 |
For a side-by-side cost breakdown, see Conventional 97 vs FHA.
How to Remove PMI from a Conventional 97 Loan
The Conventional 97 is a conventional mortgage, so its PMI is temporary. Here are ways it can be removed:
- Your loan balance reaches 80% of the home’s original value
- A new appraisal shows your home value has increased enough to give you 20% equity
- You’ve made enough principal payments to reach the required 20% equity
- You refinance into another mortgage that does not require mortgage insurance
If you believe you’ve reached 20% equity early, you can request PMI removal from your lender. A new appraisal may be required at your expense.
For strategies on building equity faster, see Gift Funds for Conventional 97 and Down Payment and Closing Costs.
Conventional 97 PMI vs FHA Mortgage Insurance
The key differences between PMI on a Conventional 97 loan and FHA mortgage insurance:
| Feature | Conventional 97 PMI | FHA MIP |
|---|---|---|
| Can it be cancelled? | Yes, at 20% equity | Usually no |
| Paid to | Private insurer | Federal Housing Administration |
| Monthly cost | Varies by credit score | Same for most borrowers |
| Upfront premium | Optional in some cases | 1.75% of loan amount |
For buyers with strong credit, Conventional 97 PMI is often cheaper than FHA MIP over time. Compare the two programs in our Conventional 97 vs FHA guide.
Paying PMI Upfront
Some lenders offer an upfront PMI option, where you pay the full cost at closing instead of monthly. This can lower your monthly payment, but it requires more cash at closing. If you sell or refinance early, you may not recoup the upfront cost.
If you need to keep your closing costs lower, review our Down Payment and Closing Costs guide for other strategies.
Key Takeaway
PMI on a Conventional 97 loan is an added cost, but it’s temporary and cancellable. The better your credit score, the less you’ll pay. Once you reach 20% equity, you can request removal and lower your monthly payment.
Frequently Asked Questions About PMI on Conventional 97 Loans
Find answers to common questions about PMI costs, removal, and how it compares to FHA mortgage insurance.
Do Conventional 97 loans require PMI?
Yes. PMI is required for all Conventional 97 loans until you reach 20% equity.
How much does PMI cost on a Conventional 97 loan?
PMI typically costs 0.3% to 1.5% of the loan amount annually, depending on your credit score and loan size.
Can PMI be removed from a Conventional 97 loan?
Yes. PMI can be cancelled once you have 20% equity in your home, based on your original loan balance or a new appraisal.
Is PMI on a Conventional 97 loan the same as FHA MIP?
No. FHA mortgage insurance usually lasts for the life of the loan, while PMI can be removed.
Can I pay PMI upfront on a Conventional 97 loan?
Some lenders allow upfront PMI payments, but most borrowers choose monthly premiums.
Does my PMI cost go down as I pay off my loan?
No. The monthly PMI cost stays the same until it's cancelled.
