Key Takeaways

PMI protects the lender, not you, when you put down less than 20%.
You can remove PMI once you reach 20% equity through payments or home appreciation.
Many buyers choose PMI to purchase sooner rather than waiting to save 20% down.

Is PMI just throwing money away?

You want to know if PMI is money down the drain or serves a purpose. Private mortgage insurance protects the lender when you put down less than 20%, and the monthly premium goes toward that coverage rather than building equity for you.

PMI typically costs 0.2% to 2% of your loan amount annually, paid monthly. The premium depends on your credit score, down payment amount, and loan type. You can remove PMI once you reach 20% equity through payments or home value appreciation. Check your loan documents for the exact removal process—some loans automatically cancel PMI at 22% equity, while others require you to request removal.

Compare the monthly PMI cost against waiting longer to save a full 20% down payment. Many home buyers choose PMI to purchase sooner rather than renting while saving, especially in markets where home values rise faster than savings grow. Share your down payment options with your lender and they can show you how PMI affects your monthly payment and total loan cost.

Is PMI just throwing money away?

Key Takeaways