Quick takeaways
- PMI and MIP both protect the lender if a loan isn't repaid — not the borrower.
- PMI (conventional loans) is generally cancellable once you reach a certain equity level; MIP (FHA loans) sometimes isn't.
- Both are usually tied to a smaller down payment, and both add to your monthly payment.
Why this insurance exists at all
Think of it this way: when you put down less than 20%, a lender is taking on more risk, because there's less of a cushion if the home's value drops or the loan goes unpaid. Mortgage insurance is how lenders offset that risk — and it's why they're willing to offer loans with lower down payments in the first place.
PMI: the conventional loan version
Private Mortgage Insurance, or PMI, is typically required on conventional loans when the down payment is below roughly 20%. It's usually billed as part of your monthly payment, and the cost generally depends on your loan size, credit profile, and down payment amount.
MIP: the FHA loan version
FHA loans use a similar concept but call it a Mortgage Insurance Premium, or MIP, and it's often structured a bit differently — commonly including both an upfront amount (often financed into the loan) and an ongoing annual amount billed monthly.
The difference that matters most: how it ends
| PMI (Conventional) | MIP (FHA) | |
|---|---|---|
| Automatic cancellation | Commonly required by law around 78% loan-to-value, based on the original amortization schedule | Depends on your down payment and loan details — sometimes lasts for the life of the loan |
| Requesting early cancellation | Often possible once you reach around 80% loan-to-value, if you ask | Generally more limited than with PMI |
| One way to remove it early | Refinancing into a new loan once you have enough equity | Refinancing into a conventional loan, if you qualify |
These are general, commonly cited reference points as of 2026. Specific rules depend on your loan program, lender, and loan documents — ask your loan servicer for your exact cancellation terms.
A common misconception worth clearing up
PMI and MIP don't protect you
It's an easy assumption to make, since you're the one paying for it. But both are designed to protect the lender if the loan isn't repaid — they don't pay out to you, and they don't reduce your own financial responsibility if something goes wrong.
How to keep track of it
- Check your loan documents for your specific cancellation terms
- Track your loan balance against your home's value over time
- Mark your calendar for when you'll likely hit the eligible threshold
- Contact your loan servicer directly to formally request cancellation once you qualify
What this guide is not
This explains general concepts only, not your specific loan's terms or current premium rates. Your loan servicer or a licensed lender can tell you exactly what applies to your mortgage.