With under 20% down, conventional loans add private mortgage insurance. See the monthly cost and how many years until you reach 20% equity and it falls away.
Private mortgage insurance, or PMI, is added to conventional loans when you put less than 20% down. It protects the lender, not you, and can be cancelled once you build enough equity. This calculator estimates the monthly cost and how long until it falls away.
PMI typically runs a few tenths of a percent of the loan each year, divided into your monthly payment, with the rate depending on your credit and down payment. You can request cancellation at 80% loan-to-value (20% equity), and by law it ends automatically at 78%. This tool estimates the months to reach 20% equity from scheduled payments alone.
Putting 20% down avoids PMI entirely. If you already have it, extra principal payments reach the 80% mark faster, and rising home values can get you there too, sometimes allowing cancellation after a new appraisal. Because PMI adds nothing to your equity, removing it as soon as you qualify is one of the easier ways to cut a mortgage payment.
You can request cancellation at 20% equity, and it ends automatically at 78% loan-to-value based on your scheduled balance.
Commonly a few tenths of a percent of the loan per year, split into monthly payments. Better credit and a larger down payment lower the rate.
Put down 20% or more on a conventional loan. Some lenders also offer lender-paid PMI or piggyback loans, though those carry their own costs.
See the exact formula and a worked example on our methodology page.