PMI in Texas: What DFW Buyers Actually Pay When They Put Down Less Than 20%

How much does PMI cost for home buyers in Dallas?

PMI (private mortgage insurance) on a conventional loan in Texas typically costs 0.46% to 1.50% of your original loan amount per year, depending on your credit score, down payment size, and lender. On a $400,000 Dallas-area home with 5% down, that works out to roughly $150–$250 per month added to your mortgage payment. PMI is required on any conventional loan where you put down less than 20%, and it stays in place until your loan balance drops to 78% of the original purchase price — at which point federal law requires your lender to remove it automatically.

By Paul Blair | September 8, 2026

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The most common question I get from first-time buyers in the DFW area right now isn't about which neighborhood to target or whether to buy new construction. It's this: "Do I really have to put down 20%, or is PMI worth paying?"

It's a fair question. The conventional wisdom says you need 20% down to avoid "throwing money away" on mortgage insurance. But in Dallas, where the median first-time buyer is 32 years old and median home prices in the suburbs run $375,000 to $430,000, waiting to accumulate that 20% can mean sitting on the sidelines for years longer than you need to.

Here's what PMI actually costs in DFW, when it makes sense to pay it, and when you might want to look at alternatives.

What PMI Actually Is — and What It Isn't

Private mortgage insurance protects your lender, not you. If you default on the loan, PMI pays the lender's loss. You get no benefit from the policy itself.

That's the part most buyers find frustrating. You're paying for insurance that covers someone else's risk.

But here's the other side of that equation: PMI is what makes it possible for lenders to offer 3%, 5%, and 10% down loans at all. Without it, you'd need 20% for every conventional mortgage. PMI is essentially the fee that buys you early entry into homeownership.

Whether that trade-off makes sense depends entirely on your numbers.

What You'll Actually Pay Each Month in Dallas

PMI rates in 2026 run from 0.46% to 1.50% of the original loan amount per year. Your credit score is the biggest variable — a buyer at 760+ pays near the bottom of that range, while a buyer at 640 pays near the top.

Here's what that looks like on real DFW purchase prices:

$380,000 home (close to entry-level in Garland, Mesquite, or Carrollton):

• 5% down ($19,000), loan amount $361,000
• PMI range: $138–$451/mo
• Realistic estimate with 700+ credit: ~$165–$200/mo

$450,000 home (median new construction in outer suburbs like Wylie or Anna):

• 5% down ($22,500), loan amount $427,500
• PMI range: $164–$534/mo
• Realistic estimate with 700+ credit: ~$195–$240/mo
• With 10% down ($45,000), loan amount $405,000: PMI drops to roughly $155–$185/mo

$550,000 home (Plano, Allen, or McKinney move-up range):

• 10% down ($55,000), loan amount $495,000
• PMI range: $190–$619/mo
• Realistic estimate with 720+ credit: ~$225–$280/mo

$675,000 home (Frisco or north Collin County):

• 10% down ($67,500), loan amount $607,500
• PMI range: $233–$759/mo
• Realistic estimate with 720+ credit: ~$280–$345/mo

Every lender prices PMI differently, and your actual rate depends on your full credit profile, the loan program, and which mortgage insurer your lender uses. These are representative ranges, not quotes. Getting pre-approved with two or three lenders is the only way to see your actual PMI cost before you're under contract.

How Long Will You Pay PMI?

This is the piece most buyers underestimate.

Under the Homeowners Protection Act, your lender must automatically cancel PMI once your loan balance reaches 78% of the original purchase price. You can request cancellation at 80% LTV if you're current on payments — but in Texas, many servicers won't act on their own. You have to submit a written request.

On a $400,000 home with 5% down and a standard 30-year mortgage, reaching 80% LTV through regular payments alone takes roughly nine years at current rates. DFW appreciation accelerates that timeline — if your home gains value, you can request early cancellation based on a new appraisal, often in three to five years.

The full cancellation process is covered in detail in How to Remove PMI in Texas, including the step-by-step request process and what your lender is required to do.

Is It Better to Wait and Save 20%?

Here's the math that rarely makes the headline: waiting to save 20% has its own cost.

Let's say you're looking at a $450,000 home in Wylie. You have $45,000 saved (10% down) but want to wait until you have $90,000 (20%). To save an additional $45,000, most DFW renters are looking at two to four years of additional saving — while paying $1,800–$2,200 per month in rent that builds zero equity.

Over two years, that's $43,200–$52,800 in rent, plus any home price appreciation you miss during that window, plus the equity you would have started building.

The PMI you'd pay in that same two years on a $405,000 loan (with 10% down) at a realistic $200/month works out to about $4,800.

Different situations change this math significantly — if you expect prices in your target area to drop, or if you're planning to stay for only a few years, waiting might make more sense. But for most buyers who are ready to purchase and have a stable income, PMI is often the cheaper choice compared to continued renting.

Alternatives to Monthly PMI

If you don't want to pay monthly PMI but aren't ready to put down 20%, you have a few legitimate options:

Lender-paid PMI (LPMI). Your lender absorbs the PMI cost in exchange for a slightly higher interest rate — typically 0.25% to 0.5% above the standard rate. You never see a separate PMI line item on your statement. The trade-off: the higher rate is permanent (until you refinance), while regular PMI goes away once you reach 20% equity. LPMI tends to work better for buyers who plan to hold the home more than seven years or who are likely to have the home appreciate slowly.

80-10-10 piggyback loan. You take out a first mortgage at 80% of the purchase price, a second mortgage (usually a HELOC) at 10%, and put down 10% in cash. No PMI required because the first loan stays at 80% LTV. This structure is particularly common for buyers in Frisco, Allen, and Plano where prices frequently push toward or above $600,000 — keeping the first mortgage below 80% avoids PMI and sometimes avoids the jumbo loan threshold too. The second lien carries a higher rate than the first, so the math isn't always in your favor — run the numbers against straight PMI before assuming the piggyback wins.

VA loans. If you're eligible for a VA loan, there's no PMI — ever, regardless of down payment. DFW has a significant military-connected population, and VA loans remain one of the best financing tools available for eligible buyers. There's a funding fee (0.5%–3.3% depending on service type and usage), but it can be financed into the loan and still often comes out ahead of years of PMI.

Conventional loans with reduced PMI programs. Fannie Mae's HomeReady and Freddie Mac's Home Possible programs allow 3% down for buyers whose household income falls below roughly 80% of the area median income — about $90,000–$110,000 for most DFW counties. These programs come with reduced PMI rates compared to standard 3% down conventional loans.

If you're comparing your options, the right choice depends on your credit profile, how long you plan to stay, and what your lender is actually quoting you. This is one of those situations where the numbers vary enough from loan to loan that it pays to compare two or three lenders before committing to a structure.

For more context on how conventional and FHA loans differ in total insurance cost, see FHA vs. Conventional Loan in Texas — FHA's mortgage insurance premium has a different structure and, for most buyers, ends up more expensive over time.

Understanding your PMI and loan structure options before making an offer puts DFW buyers in a stronger negotiating position during the option period.

Starting the Process

The most important step before you make an offer in DFW's market is getting pre-approved — not pre-qualified, but a full credit pull with a written commitment from the lender. Ask every lender to show you the PMI cost at your target down payment percentage, what it would cost to buy it out upfront (single-premium PMI is an option some lenders offer), and what the break-even looks like on LPMI versus monthly PMI.

Most buyers who ask those questions before signing a contract end up in a better loan than buyers who accepted the first quote they received.

If you're working through these numbers for a specific home, I'm happy to walk you through the math. You can reach me at greysq.com/contact.

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Frequently Asked Questions

Is PMI required on all Texas conventional loans with less than 20% down?

Yes. On any conventional loan where the down payment is below 20%, private mortgage insurance is required. The PMI rate is set by a mortgage insurer (not the lender directly), and it's added to your monthly payment. Some buyers use alternative structures like piggyback loans or lender-paid PMI to avoid the monthly PMI line item, but the insurance itself is required on standard conventional loans below the 20% threshold.

Does PMI ever go away on a Texas mortgage?

Yes. Under the Homeowners Protection Act, your lender must automatically cancel PMI when your loan balance drops to 78% of the original purchase price, and you can request cancellation at 80% LTV if you're current on payments. In Texas, many servicers don't act automatically at 80% — you'll need to submit a written request with supporting documentation. If your home has appreciated, you may be able to reach 80% faster than your amortization schedule would suggest, using a new appraisal to support the request.

What's the difference between PMI and FHA mortgage insurance?

PMI applies to conventional loans and can be removed when you reach 20% equity. FHA mortgage insurance (MIP) applies to FHA loans and works differently: if you put down less than 10%, MIP stays on your loan for its full life — you'd have to refinance into a conventional loan to remove it. For buyers with strong credit and adequate down payment, conventional loans with PMI often cost less over time than FHA loans with lifelong MIP. The full comparison is at FHA vs. Conventional Loan in Texas.

How do I avoid PMI if I can't put 20% down?

Three main paths: a VA loan (no PMI for eligible veterans, regardless of down payment), a piggyback loan structure (80-10-10, where the first mortgage stays at 80% and you take a second lien for the remainder), or lender-paid PMI (LPMI, where the lender covers the PMI cost in exchange for a slightly higher interest rate). Each has trade-offs depending on your loan amount, credit profile, and how long you plan to keep the loan. Getting quotes that show you the full payment under each structure side-by-side is the clearest way to compare them.

Does putting down more than 5% meaningfully reduce my PMI cost?

Yes, meaningfully. PMI rate tiers typically change at the 5%, 10%, 15%, and 20% down payment thresholds. Going from 5% to 10% down usually reduces your PMI rate by 0.2%–0.4% annually — on a $450,000 loan, that's $75–$150/month in savings on your PMI alone. The decision comes down to whether you have the additional cash available without depleting your emergency reserves, and whether that cash might generate better returns elsewhere.

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PMI is one of those costs that sounds like pure waste until you run the actual numbers. In most DFW scenarios, paying PMI for two to five years while you build equity beats waiting an additional two to four years to reach 20% — especially when you account for the rent you'd keep paying in the meantime.

That said, every buyer's situation is different. If you want to talk through the math for a specific home you're looking at, reach out at greysq.com/contact. I work with buyers across Dallas and Collin County and can point you toward lenders who will give you a straight comparison.

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About Paul Blair

Paul Blair is the founder and broker of Grey Square, a virtual real estate brokerage representing buyers and sellers across Dallas and Los Angeles. With 22 years in the business and more than $200 million in closed transactions, Paul works the full range of the market, from luxury homes in the Park Cities and Preston Hollow to estates in the Hollywood Hills and across the Westside. Connect with Paul and the Grey Square team at greysq.com. TX TREC #9011505 · CA DRE #01792671.