For FHA loans you must pay PMI a minimum of 5 years or 60 months no matter what.
PMI payments stop when you have reduced the loan to value ration 80%. You might be clever and ask, what if the real estate market goes up increasing my property value?
Let’s consider the above Scenario of a $300,000 purchase. Let’s suppose the market increases 10% over five years and you only put down 5% originally. That represents an increase of $30,000 for your property value. Instead of waiting 9 years for the PMI to go away, it goes away in 5. It isn’t that simple though, because your lender doesn’t know that your property value has gone up. They are sticking to their original schedule. You actually have to call your lender and request an appraisal. You have to pay for this appraisal- maybe $400-$500. If the appraisal comes back and your current loan balance represents 80% LTV or less, then your PMI will be removed. However if you fall short of the 80% LTV, even just 81%, the PMI stays and you are out your appraisal cost.
Pay more interest: Some lenders will waive the mortgage insurance requirement if the buyer accepts a higher interest rate on the mortgage loan. The rate increases generally range from .75 percent to 1 percent, depending on the down payment. The advantage is that mortgage interest is tax deductible where as PMI is not. Ask your lender.