PMI is insurance that protects the lender — not you — when your down payment is less than 20% of the home’s value. It typically costs roughly 0.2%–2% of the loan amount per year, added to your monthly payment.
On conventional loans, PMI can generally be removed once your equity reaches 20–22%, through payments, appreciation, or both. When comparing renting vs. buying with a small down payment, always include PMI in the math.
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