Duane Buziak, NMLS #1110647, fields the PMI question almost every week from buyers touring homes near Crump Park and Twin Hickory who are putting down less than 20%. Private mortgage insurance can add a real monthly cost to a Glen Allen purchase, but it is rarely permanent and often negotiable. This guide walks through what PMI actually is, what it costs on a typical Henrico loan amount, and the specific steps Duane Buziak uses to help buyers reduce, restructure, or eliminate it. Before you start, have a rough target purchase price, an idea of your credit score range, and a sense of how much cash you have available for a down payment.
Step 1: Understand Why Your Henrico Lender Requires PMI
Private mortgage insurance protects the lender, not you, when a conventional loan closes with less than 20% down. If you default, PMI reimburses the investor holding your loan for part of the loss. The Consumer Financial Protection Bureau explains this clearly: PMI exists because the loan carries more risk for the lender at a higher loan-to-value ratio, and the insurance premium shifts some of that risk to a mortgage insurer.
A lot of first-time buyers assume PMI is some kind of optional add-on fee a broker or bank tacks on to pad a file. It isn’t. On conventional loans sold to Fannie Mae or Freddie Mac, PMI is required by the agencies’ own underwriting guidelines any time the loan-to-value ratio exceeds 80%. Every broker and retail bank offering conforming conventional financing has to follow the same rule. Where a broker with access to hundreds of wholesale lenders can actually help is in shopping the PMI premium itself across multiple mortgage insurance providers, which isn’t something a single-shelf retail bank can do.
It’s also worth separating conventional PMI from FHA’s mortgage insurance premium (MIP). FHA loans, detailed on HUD.gov, charge both an upfront premium and an annual premium that behaves very differently from conventional PMI. On most FHA loans originated with less than 10% down, MIP stays for the life of the loan and doesn’t cancel just because you cross the 20% equity mark. That distinction matters a great deal when you’re deciding between an FHA and conventional path for a Glen Allen purchase, and it’s a common point of confusion buyers bring to Duane Buziak during a first consultation.
Step 2: Calculate Your Estimated PMI Cost With a Real Example
Numbers make this concrete. Say you’re under contract on a $425,000 home in Wyndham and putting down 10%, or $42,500. Your loan amount is $382,500, giving you a 90% loan-to-value ratio. At an illustrative PMI rate of roughly 0.6% annually, common for borrowers with strong credit at this LTV tier, the math looks like this:
- Annual PMI cost: $382,500 x 0.6% = $2,295
- Monthly PMI cost: $2,295 / 12 = approximately $191 per month
That $191 gets added on top of principal, interest, taxes, and insurance in your escrow payment. It’s a real number, and it’s one reason two quotes for the “same” loan amount can look wildly different if one lender quietly excludes PMI from the advertised payment.
Credit score matters more than most buyers expect. Fannie Mae’s loan-level price adjustments, published in its LLPA matrix, tie pricing tiers to credit score bands and LTV combinations, and mortgage insurers use similar tiering. A borrower at 760 or above might see a PMI rate closer to 0.4% on the same $382,500 loan, dropping the monthly cost to roughly $128. A borrower in the 660 to 679 range on the same loan could see a rate closer to 1.0% or higher, pushing PMI north of $300 a month. The spread between those two outcomes on an identical loan amount is significant, and it’s exactly why a soft credit pull mortgage pre-approval matters before you start comparing offers: you want an accurate score-based estimate, not a guess.
The mistake to avoid: comparing a monthly payment from one company that includes PMI against a quote from another that doesn’t disclose it clearly. Always ask specifically whether PMI is baked into the quoted principal-and-interest figure or listed as a separate line item, and confirm the PMI rate tier being used for your actual credit profile.
Step 3: Compare Your PMI-Avoidance Options Side by Side
Glen Allen buyers generally have four structural paths when PMI is a concern: conventional financing with standard borrower-paid PMI, an 80/10/10 piggyback structure, FHA financing with its own MIP rules, or a VA loan for eligible veterans and service members. Each behaves differently on cost, cancellation, and qualifying requirements.
- Conventional with PMI: Monthly premium added to the payment, cancellable once you reach 20% equity through payments or appreciation.
- 80/10/10 piggyback: A first mortgage at 80% LTV, a second lien covering 10%, and a 10% down payment, avoiding PMI entirely by keeping the first loan at or below 80% LTV.
- FHA with MIP: Lower down payment options, often 3.5%, but MIP typically runs for the life of the loan on high-LTV originations and doesn’t cancel the way conventional PMI does.
- VA loan: No monthly mortgage insurance for eligible veterans, active-duty service members, and certain surviving spouses, though a funding fee applies in most cases.
Some large national originators, including Rocket Mortgage, Movement Mortgage, and Alcova Mortgage, offer versions of these same programs, but as retail operations they’re typically working with one investor’s PMI pricing at a time. Duane Buziak’s broker independence, working with hundreds of wholesale lenders, means the PMI premium itself gets shopped across multiple mortgage insurance providers for the same loan scenario, which can change the monthly number even when the loan program is identical.
Lender-paid PMI (LPMI) is worth understanding here too. Instead of you paying a separate monthly premium, the lender pays it and recoups the cost through a slightly higher interest rate. That trade can lower your stated monthly payment and help a tight debt-to-income ratio qualify, but it comes with a permanence trade-off covered in Step 5.
| Structure | Down Payment | Monthly Mortgage Insurance | Cancellable? |
|---|---|---|---|
| Conventional w/ PMI | As low as 3-5% | Borrower-paid, varies by credit/LTV | Yes, at 78-80% LTV |
| 80/10/10 Piggyback | 10% | None on first lien | N/A, no PMI charged |
| FHA w/ MIP | 3.5% minimum | Upfront + annual MIP | Usually no, life of loan |
| VA Loan | 0% for eligible borrowers | None | N/A, funding fee instead |
Step 4: Increase Your Down Payment or Use a Piggyback Loan
The cleanest way to avoid PMI on a conventional loan is reaching 20% equity at closing, since that keeps your loan-to-value ratio at or below 80% from day one. On a $425,000 Innsbrook-area home, that means a $85,000 down payment. For buyers who have the cash but would rather not put all of it into the home, this is a conversation worth having, since the PMI savings need to be weighed against what that extra capital could do elsewhere.
For buyers who don’t have 20% but still want to avoid monthly PMI, the 80/10/10 piggyback structure is a practical alternative. The first mortgage covers 80% of the purchase price, a second lien (usually a home equity line or fixed second) covers 10%, and the borrower brings 10% down. Because the first mortgage itself sits at 80% LTV, no PMI applies to it. The trade-off is a second monthly payment on the piggyback loan, often at a higher rate than the first mortgage, so the math needs to be run both ways before deciding.
For FHA buyers specifically, down payment assistance programs like Dynamo DPA and Turbo DPA can help close the gap between what a buyer has saved and what’s needed to improve their loan-to-value position, where eligible. These programs won’t eliminate FHA’s MIP structure, since that’s tied to the loan type itself rather than the down payment size, but they can reduce out-of-pocket cash needed at closing and, in some structures, help buyers reach a lower LTV tier sooner. Duane Buziak can confirm current eligibility and program availability for a specific Glen Allen transaction, since these programs have income and property requirements that shift periodically.
Step 5: Ask About Lender-Paid PMI or a Split-Premium Option
Lender-paid PMI restructures where the cost shows up on your loan. Instead of a separate monthly premium added to your escrow payment, the mortgage insurance cost gets folded into your interest rate. Your quoted rate will be somewhat higher than a comparable loan with borrower-paid PMI, but your stated monthly payment won’t carry that separate PMI line item. For buyers whose debt-to-income ratio is close to a lender’s limit, this restructuring can sometimes be the difference between qualifying and not, since it changes how the payment is calculated for underwriting purposes.
A related option is single-premium or split-premium PMI, where some or all of the mortgage insurance cost is paid upfront at closing rather than spread across monthly payments. A full single premium eliminates the monthly PMI line entirely in exchange for a larger closing cost. A split premium pays part upfront and reduces the ongoing monthly premium to a smaller number. Both options require more cash at the closing table, so they tend to make the most sense for buyers who are cash-available but want to minimize their monthly housing payment for qualifying or budgeting reasons.
The important caveat with LPMI: it cannot be cancelled later. Because the cost is baked into your interest rate rather than charged as a removable monthly fee, you’re paying for it for the life of the loan unless you refinance. Borrower-paid PMI, by contrast, goes away once you hit the equity thresholds covered in Step 6. That difference should factor heavily into which structure you choose, especially if you expect to reach 20% equity within a few years through payments or Henrico home value growth.
Step 6: Track Your Equity and Request PMI Cancellation
The Homeowners Protection Act sets clear rules for standard borrower-paid PMI on conventional loans. Your servicer must automatically terminate PMI once your loan balance reaches 78% of the home’s original value, based on your original amortization schedule, as long as you’re current on payments. You also have the right to request cancellation earlier, once your balance reaches 80% of the original value, and your servicer has to grant it if your payment history is solid and there are no other liens on the property that would push your combined LTV back above 80%.
Glen Allen and broader Henrico home values have generally trended upward over recent years, and that appreciation can get you to 20% equity faster than your amortization schedule alone would suggest. Local value data from sources like Zillow or Redfin can help you estimate current market value against your original purchase price, which matters if you want to request cancellation based on appreciation rather than waiting purely on paydown.
To request cancellation ahead of the automatic termination point:
- Submit a written request to your loan servicer asking for PMI cancellation.
- Show a good payment history, generally no late payments in the past 12 months.
- Confirm there are no subordinate liens (second mortgages, HELOCs) that would push your combined loan-to-value back above 80%.
- Be prepared to pay for a current appraisal or broker price opinion if your servicer requires third-party proof of value, particularly if you’re requesting cancellation based on appreciation rather than the original amortization schedule.
Servicers vary on exactly how they process appreciation-based requests, so calling and asking for their specific PMI cancellation policy in writing is worth the ten minutes it takes.
Step 7: Compare Real Numbers With a No Credit Hit Pre-Approval
Before locking in any structure, it helps to see the actual numbers side by side rather than working from generic estimates. A soft credit pull mortgage pre-approval, sometimes called a NoTouch Credit Pull, lets you get accurate PMI-inclusive payment scenarios without a hard inquiry landing on your credit report. That matters because multiple hard inquiries from shopping around can nudge your score down right when you need it at its highest for the best PMI pricing tier.
Duane Buziak’s “Dare to Compare” approach runs the same loan amount and purchase price across FHA, conventional, and VA (where applicable) so you can see the true monthly impact of MIP versus PMI versus no mortgage insurance at all, using your actual credit profile rather than a published rate sheet. On a $382,500 loan, for example, that comparison might show the conventional PMI payment discussed in Step 2, the FHA MIP equivalent, and, for an eligible veteran, the VA option with no monthly mortgage insurance charge at all.
Duane Buziak, NMLS #1110647, recommends running this comparison across at least two loan programs before choosing a structure and locking a rate, since the “best” program on paper often shifts once PMI or MIP costs are factored into the real monthly number rather than just the advertised rate.
Frequently Asked Questions
What is PMI and why do I have to pay it? PMI is private mortgage insurance required on conventional loans with less than 20% down, and it protects the lender’s investor against default risk, not you as the borrower.
How much does PMI typically cost on a Glen Allen home purchase? On a $382,500 loan at a 0.6% rate, PMI runs about $191 a month, though your actual rate depends heavily on your credit score and loan-to-value ratio.
Does FHA MIP work the same way as conventional PMI? No, FHA’s mortgage insurance premium typically stays for the life of the loan on high-LTV originations and doesn’t cancel automatically the way conventional PMI does.
Can Duane Buziak help me get a soft credit pull mortgage pre-approval to compare PMI scenarios? Yes, Duane Buziak offers a no hard inquiry mortgage pre-approval process specifically so Glen Allen buyers can compare PMI-inclusive payments without a credit score hit.
What is an 80/10/10 piggyback loan and how does it avoid PMI? It splits your financing into an 80% first mortgage, a 10% second lien, and a 10% down payment, keeping the first loan at or below 80% LTV so no PMI applies.
When does PMI automatically cancel on a conventional loan? Under the Homeowners Protection Act, your servicer must terminate PMI automatically once your loan balance reaches 78% of the home’s original value, assuming payments are current.
Is lender-paid PMI (LPMI) ever a better option than monthly PMI? It can help your debt-to-income ratio qualify by removing the separate PMI line item, but it’s baked into your interest rate for the life of the loan and can’t be cancelled later.
Does GlenAllenMortgage.com compare PMI costs across multiple lenders? Yes, working through hundreds of wholesale lenders lets Duane Buziak shop mortgage insurance pricing across providers rather than relying on a single retail investor’s rate card.
Duane Buziak, NMLS #1110647, Glen Allen Mortgage Broker of the Year 2025, VA Broker of the Year 2024 & 2025, and Scotsman Guide Top Originator, brings that broker-independence advantage to every PMI conversation, shopping structures across FHA, conventional, VA, and piggyback options rather than presenting a single in-house product.
Running Your Own PMI Numbers Before You Lock a Rate
PMI doesn’t have to be a permanent fixture on your Glen Allen mortgage, and in many cases it isn’t even the right comparison point once MIP, LPMI, or a piggyback structure are on the table. The only way to know which structure actually saves you money is to run your specific numbers, at your actual credit score, against your actual target purchase price.
Get your free mortgage consultation today and discover why Glen Allen families trust Duane Buziak for personalized guidance, a stress-free approval process, and access to hundreds of wholesale lenders through a single soft-pull pre-approval.
