PMI in the US — What It Costs, How to Cancel It, and Whether to Avoid It

## PMI rates by credit score and LTV PMI annual rates vary based on your credit score and loan-to-value ratio: | LTV | Credit 760+ | Credit 720–759 | Credit 680–719 | |---|---|---|---| | 95% | 0.32% | 0.60% | 1.00% | | 90% | 0.20% | 0.40% | 0.68% | | 85% | 0.16% | 0.30% | 0.52% | On a $350,000 loan at 90% LTV with a 740 credit score: 0.40% = $1,400/year = $117/month. ## Is it better to put 20% down or accept PMI? If putting 20% down means depleting your savings: accept PMI, keep the emergency fund. If you have ample savings: put 20% down to avoid PMI. The opportunity cost of the extra down payment (20% vs 5%): 15% of home value could be invested at 7–10% returns. If your PMI is $150/month and you'd earn 8% on the extra down payment money, the math often favours the smaller down payment. ## Lender-paid PMI (LPMI) Some lenders offer LPMI: they pay PMI but charge a higher interest rate. You can't cancel LPMI — the rate is permanent. LPMI makes sense only if you plan to refinance or sell within 3–5 years before the accumulated premium exceeds what you'd have paid with borrower-paid PMI.