What Is PMI and Why Do Lenders Require It?

Private Mortgage Insurance — or PMI — is one of the most misunderstood parts of buying a home in Florida. If you are putting down less than 20% on a conventional loan, your lender will likely require PMI. But PMI is not punishment — it is actually the tool that makes homeownership possible for millions of buyers who do not yet have a large down payment saved.

In this video, Natallia Mann walks you through exactly what PMI is, how much it costs, and — most importantly — how to get rid of it once you have built enough equity in your Central Florida home.

How Much Does PMI Cost in Florida?

PMI rates in Florida typically range from 0.5% to 1.5% of the original loan amount per year, depending on your credit score, down payment, and loan type. On a $350,000 home with 5% down, that could mean $125–$370 per month added to your payment.

  • Credit score 760+: You will typically qualify for the lowest PMI rates
  • Credit score 680–759: Moderate PMI, still very manageable
  • Credit score below 680: Higher PMI — a great reason to work on credit before buying

When Does PMI Go Away?

Under federal law (the Homeowners Protection Act), your lender must automatically cancel PMI once your loan balance reaches 78% of the original purchase price. But you can request cancellation earlier — at 80% LTV — and save months of payments. This is especially relevant in Central Florida where home values have appreciated significantly, potentially helping you reach that threshold faster than your amortization schedule suggests.

PMI Alternatives Worth Knowing

  • FHA loans: Have their own mortgage insurance (MIP) — different rules apply
  • VA loans: No mortgage insurance — an incredible benefit for eligible veterans in Orlando and beyond
  • 80/10/10 piggyback loans: Split financing to avoid PMI altogether
  • Lender-paid PMI: A higher rate in exchange for no monthly PMI charge

Questions About PMI on Your Central Florida Purchase?

Every homebuyer’s situation is different. Book a free call with iMortgage4u and we will walk through your specific numbers — so you know exactly what you are getting into before you make an offer.