Bye-Bye PMI

Save money on your mortgage every month

Now you can use a conventional mortgage and borrow up to 85% with no PMI! Bye-Bye PMI eliminates the monthly fee for private mortgage insurance (PMI) that you’d normally pay when you borrow more than 80% of your home’s sale price. That’s more loan for you without the additional continuing payment.

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What is PMI?

When a mortgage lender considers your application for a home loan, they evaluate how likely you are to make your loan payments. When you put less money down, you’re borrowing more of the lender’s money, so you’re considered a higher risk. One thing lenders do to offset this risk is require private mortgage insurance when you borrow more than 80% of the property’s sale price. PMI is usually paid monthly by the borrower as part of the mortgage payment.

How to calculate PMI

The cost of mortgage insurance varies based on your loan amount, loan-to-value ratio, and credit score. According to Freddie Mac, most borrowers pay between $30 and $70 per month for PMI for every $100,000 borrowed. Mortgage lenders typically choose the lowest cost mortgage insurance provider for their borrowers.

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How to qualify for Bye-Bye PMI

As with any mortgage, we’ll need to evaluate your income, assets, employment, credit, identity, and other information. You can get started by contacting your CCM loan originator.

Bye-Bye PMI is a conventional conforming mortgage program offering a 30-year fixed-rate home loan. Conventional means it’s not insured by the government, like an FHA, VA, or USDA loan. Conforming means it follows the loan limits set annually by the Federal Housing Finance Agency, which means it’s not a jumbo loan. You may also hear conforming mortgages referred to as Fannie Mae or Freddie Mac loans. Fannie and Freddie are the large entities that purchase conforming loans after closing.

Conventional loans

Conventional loans come in many forms. Bye-Bye PMI is a 30-year fixed-rate mortgage that allows a borrower to make a down payment of only 15% without paying monthly PMI. While there are other conventional loans with lower down payments, they require a PMI payment every month, adding to the monthly and overall cost of the mortgage.

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Frequently asked questions

What is private mortgage insurance? (PMI)

When you borrow more than 80% of your home’s sale price, lenders consider you a higher risk for non-repayment of the loan. PMI offsets that risk with insurance, typically paid monthly by the borrower as part of their mortgage payment.

How is PMI calculated?

PMI is based on several factors, including down payment percentage, credit score, home value, and debt-to-income ratio (DTI). A higher down payment percentage, higher credit score, and lower DTI will all help lower your PMI. According to Freddie Mac, most borrowers pay between $30 and $70 per month for PMI for every $100,000 borrowed. Your loan officer can give you the most accurate PMI calculation.

When does PMI go away?

PMI ends once you have sufficient equity in your home. It will cancel automatically at 22% equity, but you can request an earlier cancellation at 20%. You must submit a written cancellation request to your loan servicer, and meet requirements, such as having a good payment history and being current with your payments.

How do I get rid of PMI?

You can ask your loan servicer to remove PMI once you have 20% equity in your home. Servicers are required to remove it automatically when you reach 22% equity. If you are considering a loan with PMI, discuss the coverage termination with your loan officer. Read more

How can I avoid PMI?

To avoid PMI completely with a conventional loan, you’ll need a minimum 20% down payment, or 15% with CCM’s Bye-Bye PMI loan program.

How does PMI impact my amortization schedule?

PMI will show as a separate item on your monthly mortgage statement until you have sufficient equity in your home to remove it. Once it’s removed, your monthly payment will decrease. This will be reflected on the amortization schedule (chart showing your loan payments and balances) you receive from your loan originator.

How does Bye-Bye PMI differ from a conventional mortgage loan?

Bye-Bye PMI allows you to borrow up to 85% of your home’s sale price without PMI, which usually starts at 80%. This saves you money every month.

PMI vs. MIP

PMI is private mortgage insurance, generally required when your down payment on a conventional mortgage is less than 20%. You can ask your loan servicer to remove PMI once your loan balance is 80% of the original value of your home, but if you don’t request cancellation, servicers will automatically cancel it when your principal balance reaches 78%.

MIP is the monthly mortgage insurance premium required for FHA loans and lasts as long as you have the loan. You’ll need to refinance to remove it. FHA loans also require a one-time upfront mortgage insurance premium. While neither VA nor USDA loans include PMI or MIP, they do require additional fees you should review with your loan officer.