Private Mortgage Insurance is one of the more misunderstood costs in homebuying, mostly because of who it actually protects — and it isn't you. PMI is typically required on a conventional loan when your down payment is below 20% of the purchase price, and it exists to protect the lender's financial interest if you stop making payments, not to protect the homeowner's investment. * The cost isn't a flat fee — it typically runs between 0.46% and 1.5% of your original loan amount per year, depending on your down payment size and credit score. On a $300,000 mortgage, that translates to roughly $115 to $375 a month, usually folded directly into your regular mortgage payment rather than billed separately. * Two factors move that cost the most: a larger down payment lowers your PMI rate, and a higher credit score lowers it further, since both signal lower risk to the insurer backing the policy. * PMI isn't permanent. You can generally request removal once your loan balance drops below 80% of your home's original purchase price, or once you've built up 20% equity through payments or appreciation. Even if you never ask, federal law requires your lender to automatically cancel PMI once your balance reaches 78% of the home's original value, as long as your payments are current. * Because PMI is specifically tied to conventional loans and the 20% down payment threshold, other loan types — like FHA loans — use their own separate mortgage insurance rules that don't follow the same removal timeline.