When PMI applies
On most conventional purchases, PMI is required when your down payment is under 20%. The cost depends on factors like credit score, occupancy, down payment size, and loan type. It is added to your monthly payment and comes off once you have built enough equity, which makes it very different from a permanent cost.
A quick example
On a $350,000 conventional loan, PMI often runs somewhere between $90 and $250 a month depending mostly on your credit score. A borrower with a 760 score might pay near the low end, while a 660 score can land near the top — one of the clearest ways credit affects your real monthly cost.
How it affects your payment and qualifying
Because PMI is part of your housing payment, it raises your debt-to-income ratio and slightly reduces how much home you can afford. It also factors into your closing costs if you choose a single upfront premium instead of the monthly option. Weighing a larger down payment against paying PMI for a few years is a common trade-off worth running the numbers on.
Why it is different from FHA MIP
PMI is private, risk-based insurance. Borrowers with stronger credit often pay much less than FHA borrowers would for MIP, and PMI can usually be canceled while FHA insurance often cannot. PMI can typically be removed at 80% loan-to-value by request and must drop automatically at 78% based on the original value, assuming the loan is current.