How PMI Works with a HomeOne® Mortgage
Private Mortgage Insurance (PMI) protects the lender when a borrower defaults on their loan. With the HomeOne® mortgage, PMI is required when the buyer puts down less than 20%.
PMI for HomeOne® is temporary. Once a homeowner builds to 20% equity, PMI can be canceled. This is a major difference from FHA loans, where mortgage insurance premiums (MIP) usually last for the life of the loan.
See HomeOne® Loan Requirements for the full eligibility rules.
How Much Does PMI Cost?
Private mortgage insurance costs depend on factors like your credit score, loan amount, and how much you put down. Borrowers with stronger credit scores generally get lower rates on PMI.
Here are sample PMI costs for HomeOne® borrowers on a $500,000 loan:
| Credit Score Range | Annual PMI Rate (% of Loan Amount) | Monthly PMI on $500,000 Loan |
|---|---|---|
| 760+ (Excellent) | 0.55% | $229.17 |
| 740–759 (Very Good) | 0.69% | $287.50 |
| 720–739 (Good) | 0.76% | $316.67 |
| 700–719 (Good) | 0.90% | $375.00 |
| 680–699 (Fair) | 1.20% | $500.00 |
| 660–679 (Fair) | 1.65% | $687.50 |
| 640–659 (Fair) | 1.80% | $750.00 |
| 620–639 (Minimum) | 1.95% | $812.50 |
For context, see HomeOne® vs FHA to compare PMI with FHA's lifetime mortgage insurance.
How to Remove PMI from a HomeOne® Loan
Because HomeOne® is a conventional mortgage, PMI can eventually be removed. Here's how:
- Your loan balance reaches 80% of the home's original value
- A new appraisal shows your home value has increased enough for 20% equity
- You make additional principal payments to speed up equity growth
- You refinance into a mortgage that doesn't require PMI
Example: If you bought a $500,000 home with 3% down, PMI would be required initially. After paying down your loan and reaching a balance of $400,000, which is 80% of your original value, you can ask your lender to remove PMI.
Borrowers can also request early removal if property values rise, though an appraisal may be required.
HomeOne® PMI vs FHA Mortgage Insurance
Here's how PMI on a HomeOne® mortgage differs from FHA mortgage insurance:
| Feature | HomeOne® PMI | FHA MIP |
|---|---|---|
| Can you remove it? | Yes, after reaching 20% equity | No, stays for the life of the loan |
| Who gets the payment? | Private mortgage insurer | FHA |
| Monthly payment amount | Based on your credit score | Same for most borrowers |
| Upfront fee | Not usually | 1.75% of loan amount at closing |
For buyers with decent credit scores, HomeOne® PMI often costs less long term than FHA's MIP. If your credit is lower, FHA might be cheaper upfront but more expensive over the life of the loan.
Paying PMI Upfront
Some lenders let you pay PMI as a one-time lump sum at closing instead of paying monthly. Single-pay PMI reduces your monthly payments but requires more cash for your purchase upfront.
For example, on a $500,000 loan, upfront PMI might be around $8,500. If you sell or refinance in a few years, you may not get the full benefit compared to paying monthly. Single-premium PMI can be a good use of excess seller concessions or gift funds.
Key Takeaway
HomeOne® requires PMI with less than 20% down, but unlike FHA loans, that insurance can be removed once you build equity. Your credit score plays a big role in what you'll pay, and higher scores can significantly reduce monthly PMI costs.
Frequently Asked Questions About HomeOne® PMI
Find answers to common questions about PMI costs, removal, and how it compares to FHA mortgage insurance.
Do HomeOne® mortgages require PMI?
Yes. PMI is required on all HomeOne® loans until you reach 20% equity.
How much does PMI cost on a HomeOne® loan?
PMI usually ranges from 0.3% to 1.5% of the loan balance annually, depending on your credit score and down payment size.
Can PMI be removed from a HomeOne® mortgage?
Yes. PMI can be canceled once you reach 20% equity, based on the home's original value or a new appraisal.
Is PMI on HomeOne® the same as FHA MIP?
No. FHA insurance typically lasts for the life of the loan, while PMI on HomeOne® can be removed.
Can I pay PMI upfront on a HomeOne® loan?
Some lenders allow an upfront PMI option, though most buyers choose monthly premiums.
Does PMI drop as I pay down my loan?
No. The monthly PMI amount stays the same until it's removed at 20% equity.
