Arizona buyer question
What is mortgage insurance, and when does it go away?
Mortgage insurance can be part of your monthly payment. Here's what it is, how it differs by loan type, and how the Homeowners Protection Act lets private mortgage insurance end.
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The short answer
Quick answer: Mortgage insurance protects the lender, not you, if a loan isn't repaid, and it's usually required on smaller down payments and on FHA and USDA loans. On a conventional loan for your primary home, federal law lets you ask to cancel private mortgage insurance once your balance is paid down far enough, and it must end automatically later.
Source: Consumer Financial Protection Bureau, What is mortgage insurance and how does it work? and When can I remove PMI? (both last reviewed Aug 28, 2026). Last updated .
What is mortgage insurance?
Mortgage insurance lowers the lender's risk of making a loan, which can let you qualify for a loan you might not otherwise get. It protects the lender, not you: if you fall behind and the home is sold through foreclosure for less than what's owed, mortgage insurance helps repay the lender. It also adds to the cost of the loan, through your monthly payment, your closing costs, or both (CFPB).
How does it work on different loan types?
| Loan type | What it is | How it's paid | When it can end |
|---|---|---|---|
| Conventional loan | Private mortgage insurance (PMI), which the lender can arrange with a private company | Mostly monthly, with little or no payment at closing | Federal cancellation and automatic-termination rules (Homeowners Protection Act) |
| FHA loan | Mortgage insurance premiums paid to FHA, required on all FHA loans | Upfront and monthly | Different requirements; ask your servicer |
| USDA loan | Program insurance similar to FHA's | Upfront and monthly | Ask your servicer |
| VA-backed loan | No monthly mortgage insurance; the VA guarantee plays that role | An upfront funding fee | Not applicable |
Source: CFPB, What is mortgage insurance and how does it work? (last reviewed Aug 28, 2026). Program rules change; your Loan Estimate shows what applies to a specific loan.
Upfront FHA and USDA premiums and the VA funding fee can be rolled into the loan instead of paid in cash, but that raises the loan amount and the overall cost (CFPB). On a conventional loan, PMI premiums are set by the private mortgage insurance company, which is usually chosen by your lender.
Where do I see it on a Loan Estimate?
A monthly premium appears on page 1 in Projected Payments and is added to your payment. An upfront premium appears on page 2 in Section B, the services you can't shop for. Some loans have both (CFPB). See what's on a Loan Estimate.
When does private mortgage insurance go away?
For borrower-paid PMI on a home loan for a single-family primary residence that closed on or after July 29, 1999, the Homeowners Protection Act sets three ways it ends (CFPB; 12 U.S.C. §4902):
You ask to cancel it
Once your balance reaches a set point measured against the home's original value, either on schedule or sooner through extra principal payments, you can ask your servicer in writing to cancel. You need a good payment history, be current, have no second lien, and may need to show the home hasn't lost value.
It ends automatically
Even if you never ask, the servicer must end PMI on the date your balance is scheduled to reach a lower set point, as long as you're current on payments.
It ends at the midpoint
If neither has happened, PMI must end the month after you reach the halfway point of the loan's original amortization schedule, if you're current.
"Original value" generally means the lower of the purchase price or the appraised value when you bought; after a refinance, it's the appraised value at that time (CFPB). At closing, your lender has to tell you in writing when you can ask to cancel, based on your loan's amortization schedule (12 U.S.C. §4903). Keep that disclosure.
Create your free account to see all homes for sale that fit the monthly payment you're comfortable with, each with its actual property taxes, HOA dues, estimated homeowners insurance, and mortgage insurance when it applies, plus its own estimated closing costs and APR disclosure.
Opens a third-party home search site. Payments shown there are estimates to help you search, not a loan offer or rate quote. Your actual payment depends on price, down payment, credit, taxes, insurance, HOA, and loan program.
What about FHA, USDA, VA, and lender-paid insurance?
- FHA. The CFPB says FHA and VA loans have different requirements from the PMI rules above, and to contact your servicer with questions about mortgage insurance on an FHA loan.
- USDA. The program charges its own insurance at closing and monthly. Ask your servicer how and when it applies to your loan.
- VA. There's no monthly mortgage insurance, so there's nothing to cancel. The funding fee is paid upfront or financed.
- Lender-paid mortgage insurance. If your lender pays for the mortgage insurance, different rules apply (CFPB). Ask how it affects your loan before you choose it.
- Investor rules. Fannie Mae and Freddie Mac can set their own PMI cancellation guidelines, as long as they're not less favorable to you than the federal rules (CFPB).
Why does mortgage insurance matter for a monthly budget?
When it applies, it's part of the monthly payment, so it changes which homes fit your budget. A payment-first home search includes mortgage insurance in each home's estimated payment when it applies, along with that home's own property taxes, HOA dues, and insurance. A free account shows every home that fits the payment you're comfortable with, plus a closing cost estimate and APR disclosure for each one.
More: Arizona conventional loans · Arizona FHA loans · Arizona VA loans · Arizona USDA loans · how much money to have saved
General information, not a loan offer. Whether mortgage insurance applies, what it costs, and when it ends depend on the loan you choose and qualify for.
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Create your free account to see all homes for sale that fit the monthly payment you're comfortable with, each with its actual property taxes, HOA dues, estimated homeowners insurance, and mortgage insurance when it applies, plus its own estimated closing costs and APR disclosure.
Opens a third-party home search site. Payments shown there are estimates to help you search, not a loan offer or rate quote. Your actual payment depends on price, down payment, credit, taxes, insurance, HOA, and loan program.
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Sources
- Consumer Financial Protection Bureau, What is mortgage insurance and how does it work? (last reviewed Aug 28, 2026; retrieved October 6, 2026)
- Consumer Financial Protection Bureau, When can I remove private mortgage insurance (PMI) from my loan? (last reviewed Aug 28, 2026; retrieved October 6, 2026)
- Consumer Financial Protection Bureau, What is private mortgage insurance? (last reviewed Aug 28, 2023)
- 12 U.S.C. §4902 (Homeowners Protection Act), termination of private mortgage insurance (retrieved October 6, 2026)
- 12 U.S.C. §4903 (Homeowners Protection Act), disclosure requirements (retrieved October 6, 2026)
- Consumer Financial Protection Bureau, Loan Estimate Explainer (retrieved October 6, 2026)
Frequently asked questions
What is mortgage insurance?
Insurance that lowers the lender's risk if a borrower doesn't repay. It protects the lender, not you, and adds to the cost of the loan through the monthly payment, closing costs, or both.
Who has to pay mortgage insurance?
Typically borrowers with smaller down payments on conventional loans, and borrowers on FHA and USDA loans. VA-backed loans have no monthly mortgage insurance but charge an upfront funding fee.
When can I cancel PMI?
Under the Homeowners Protection Act, you can ask your servicer in writing once your balance reaches a set point measured against the home's original value, if you're current, have a good payment history, have no second lien, and the home hasn't lost value.
Does PMI end automatically?
Yes. For covered loans, the servicer must end PMI when your balance is scheduled to reach a lower set point, or the month after the midpoint of the loan's amortization schedule, as long as you're current on payments.
Does FHA mortgage insurance go away the same way?
No. The CFPB says FHA and VA loans have different requirements from the private mortgage insurance rules, and to contact your servicer with questions about an FHA loan.
Is mortgage insurance included in a monthly payment estimate?
It should be when it applies. On a Loan Estimate, a monthly premium is listed on page 1 under Projected Payments, and an upfront premium on page 2 in Section B.