Reviewed and approved by Samuel Corso, licensed Texas insurance agent.

What is private mortgage insurance in Texas — and is it home insurance?

No, it isn't home insurance — and the difference isn't a technicality.

Private mortgage insurance, almost always shortened to PMI, is described by the Texas Department of Insurance (TDI) in one sentence that answers most of the question:

"Private mortgage insurance protects your lender – not you – if you stop making mortgage payments."

You pay the premium. The lender is the one protected. If your roof comes off in a hailstorm, PMI does nothing at all — that's your homeowners policy's job, and it's a separate product with a separate premium.

The reason this is worth understanding rather than shrugging at is the money. PMI is frequently folded into a monthly payment nobody itemises, and unlike your homeowners premium, it is often temporary — a line that can eventually come off, if you know to ask.

Here's what we'll cover: what PMI is and who it protects, when lenders ask for it, what TDI says it costs, when it can usually be cancelled and the step most people skip, the three mortgage-adjacent products that get confused with each other, who regulates what when something goes wrong, the tax question we won't answer, and what to check on your own statement this week.

PMI protects the lender. You pay for it.

TDI's longer statement of it, from its property and casualty pages:

"If you have less than a 20% down payment when you purchase a home, you most likely will be required to purchase private mortgage insurance or PMI. PMI protects the lender on a conventional mortgage in the event the borrower defaults and the lender forecloses on the property. The premium for PMI is paid by the borrower and may be canceled once certain conditions are met."

Three facts in one paragraph, and all three surprise people:

• It exists because of your down payment, not because of your house.
• It protects the lender, in the event of a default and foreclosure.
• It is paid by you, and it may be cancelable.

That last word is the one that's worth money.

When lenders ask for it

TDI's consumer version is short: "Most lenders require you to buy private mortgage insurance (PMI) if you make less than a 20% down payment on your house. The cost is usually folded into your mortgage payment. Your lender will get the insurance for you and tell you about the terms during closing."

Two details in there are easy to miss on closing day.

The lender arranges it, not you. This isn't a policy you shopped for, and there's no agent of yours behind it. It arrives as part of the loan.

The terms get explained at closing — which is to say, on the single busiest paperwork day of the entire purchase, somewhere in a stack of documents. If you can't remember being told, that's ordinary rather than suspicious. It's also the reason so many households carry PMI for years past the point they needed to.

If you're at the start of a purchase rather than the middle of one, our guide on home insurance when buying or selling a home in Texas covers the coverage side of the same timeline.

What TDI says it costs

TDI publishes a range rather than a figure, and the range is wide:

"The cost of PMI coverage can range from 0.5% to 6% of the amount of your loan. The cost depends on your down payment, the type and term of your loan, and your credit score."

Wide ranges are usually a sign that the inputs matter more than the average does, and that's the case here — down payment, whether the rate is fixed or adjustable, the term, and credit score all move it. TDI's separate description puts the same range as "anywhere from ½ of 1% to almost 6% of the principal amount of the loan."

Because it's usually bundled into one monthly payment, the practical problem isn't the cost so much as the invisibility of it. Most people could not say what they pay for PMI in a year. That number is knowable, and knowing it is what makes the next section worth acting on.

It often doesn't have to be permanent

Here is the part that repays ten minutes of attention.

TDI's consumer guidance: "You can usually cancel the policy when the balance of your loan is 80% or less than the current market value of your home. Your lender should tell you when you can cancel the insurance."

And TDI describes a notice you should be receiving: "Your lender is required to notify you on an annual basis that it is possible to cancel PMI." TDI adds where it usually turns up — the notification "is often included with the information regarding the amount of interest you paid on the mortgage and the disbursements from your escrow account."

In other words, the reminder arrives inside the annual mortgage-interest paperwork, at the time of year when people are least inclined to read a mortgage document closely. That is the single most common reason PMI outstays its welcome.

Four more things TDI notes, and each one changes the plan:

• Many lenders use a lower threshold than the one you've heard. TDI: "many lenders now seek having the principal balance reduced to 78% (rather than 80%), which has been suggested by Fannie Mae if you reside in the home, and from 65 to 70% for rental property." So the number that governs your loan may not be the number in the general advice — which is exactly why the lender is the one to ask.
• An appraisal is likely to be part of it. TDI: "An appraisal will probably be required to cancel PMI."
• Check the neighbourhood before paying for that appraisal. TDI: "You may want to consider the valuation of similar properties in your neighborhood before expending the cost for a professional appraisal." An appraisal that comes back short costs you the fee and changes nothing.
• Some loans work differently. TDI notes "other variations of this type of insurance that may not be canceled if the mortgage is backed by the Federal Housing Administration (FHA) or the Department of Veterans Administration (VA)."

TDI's own instruction on where to take the question is unambiguous, and it isn't to TDI: "The lender is your best source for details regarding what is necessary to cancel PMI. TDI does not maintain mortgage information."

So the sequence that actually works is: check what similar homes nearby have sold for, call your lender or servicer, ask what their threshold is and what evidence they need, and only then decide whether to pay for an appraisal.

Three products that get confused, and what each one is for

People meet all three of these around a house purchase, all three have "insurance" attached, and they do entirely different jobs.

Private mortgage insurance — protects the lender if the borrower defaults and the lender forecloses. Paid by the borrower. Often cancelable.

Homeowners insurance — protects you and your property. TDI's contrast is direct: "Homeowners insurance: Protects you from losses due to fire, weather, other types of property damage, or theft. You pay your homeowners premium every year." Our guide on how home insurance works in Texas covers what's inside it.

Title insurance — protects ownership rather than the building. TDI: "Title insurance protects you from problems with an ownership title when you buy real estate." It comes in two forms — "Owner's policy: Protects the homeowner" and "Loan policy: Protects the rights of the lender."

Notice the pattern once it's laid out: two of these three exist principally to protect the lender's position, and only one of them is there for your house. That's not a scandal — a lender taking a position on an asset it hasn't been paid for is unremarkable — but it's worth knowing which of the lines on your statement is actually standing between you and a hailstorm.

If your homeowners premium is paid through an escrow account alongside all this, our guide on home insurance, escrow and your mortgage in Texas covers how that account behaves, and is home insurance required in Texas covers where the requirement actually comes from.

Who to call when something looks wrong

This is genuinely non-obvious, and getting it wrong costs weeks. TDI sets out the split in plain terms:

"The Department of Banking regulates lenders. TDI regulates private mortgage insurance companies. (To regulate means to license and to ensure laws are followed.)"

So:

• A problem with your lender or servicer — the annual notice never arrives, a cancellation request goes nowhere, the escrow figures don't add up — TDI directs you to the Texas Department of Banking: "If you have a complaint about your lender, contact the Texas Department of Banking."
• A question about the insurance side, or you're simply not sure who to ask — TDI: "If you're not sure who to contact or have general insurance questions, call our Help Line at 800-252-3439."

TDI also notes what should be on the notice itself: an address and telephone number for the lender, along with TDI's toll-free number.

The tax question

Is PMI tax deductible is one of the most searched versions of this topic, and it isn't one we'll answer. Deductibility depends on federal tax rules and on your own circumstances, it has changed more than once, and we're an insurance agency — a tax professional is the right person for that question, and it's worth asking them rather than an article.

The related question about your homeowners premium is a different one, and we cover it in is home insurance tax deductible in Texas.

What to check on your statement this week

1. Find out whether you're paying PMI at all. It'll be a line on the mortgage statement or inside the escrow breakdown, not on your homeowners policy.
2. Work out the annual figure, not the monthly one. It's the number that tells you whether this is worth chasing.
3. Look for the annual notice. TDI says your lender is required to send one yearly, often with the mortgage-interest paperwork.
4. Check what similar homes nearby have sold for before spending anything on an appraisal.
5. Call the lender or servicer and ask two direct questions: what's your threshold, and what evidence do you need from me?
6. Ask whether your loan type allows cancellation at all — TDI notes FHA- and VA-backed variations that may not be cancelable.
7. Keep your homeowners insurance in a separate mental box. It's the one protecting the house, and it's the one worth re-shopping when the renewal lands.

Key facts

• PMI protects the lender, not you. TDI: "Private mortgage insurance protects your lender – not you – if you stop making mortgage payments."
• You pay for it. TDI: "The premium for PMI is paid by the borrower and may be canceled once certain conditions are met."
• It's triggered by the down payment. TDI: "Most lenders require you to buy private mortgage insurance (PMI) if you make less than a 20% down payment on your house."
• The lender arranges it. TDI: "Your lender will get the insurance for you and tell you about the terms during closing."
• Cost range, per TDI: "can range from 0.5% to 6% of the amount of your loan," depending on down payment, loan type and term, and credit score.
• It's usually cancelable. TDI: "You can usually cancel the policy when the balance of your loan is 80% or less than the current market value of your home."
• There's an annual notice. TDI: "Your lender is required to notify you on an annual basis that it is possible to cancel PMI" — often bundled with the mortgage-interest and escrow paperwork.
• Your lender's threshold may be lower than 80%. TDI: "many lenders now seek having the principal balance reduced to 78%... and from 65 to 70% for rental property."
• An appraisal is likely. TDI: "An appraisal will probably be required to cancel PMI" — and TDI suggests checking comparable local valuations first.
• FHA- and VA-backed loans may differ. TDI notes variations "that may not be canceled."
• Ask the lender, not TDI, about cancelling. TDI: "The lender is your best source for details regarding what is necessary to cancel PMI. TDI does not maintain mortgage information."
• Two different regulators. TDI: "The Department of Banking regulates lenders. TDI regulates private mortgage insurance companies."
• PMI is not homeowners insurance and not title insurance. TDI: "Homeowners insurance: Protects you from losses due to fire, weather, other types of property damage, or theft," while a title "Loan policy: Protects the rights of the lender."
• TDI's Help Line is 800-252-3439.

Sources: Texas Department of Insurance — What is private mortgage insurance? Learn why you might need it, Private Mortgage Insurance (PMI), What is title insurance? Why do I need it for my new house?. TDI's Help Line is 800-252-3439. Mortgage terms, thresholds and cancellation requirements are set by your lender and vary by loan; your lender or servicer is the source for what applies to yours. Nothing here is tax advice — for the tax treatment of any premium, speak to a tax professional. This page is general information, not legal advice. For an insurance question, ask your agent or contact the Texas Department of Insurance.

Take the next step

The quiet cost in this topic isn't the PMI rate. It's the years of paying a premium after the reason for it has gone, because the reminder arrives once a year inside a document nobody opens.

So the useful move is small: find the line, find the annual number, and make one call to your lender to ask what their threshold is and what they need to see. Worst case you learn you're not there yet, and you now know what "there" looks like.

And while you have the mortgage paperwork open, it's a natural moment to look at the policy that actually protects the house — how much is home insurance in Texas covers what drives that number, and how home insurance quotes work in Texas covers why the same house prices differently at different companies.

Credify is a licensed insurance agency in Texas. We don't sell mortgages or PMI — but if the homeowners policy sitting next to it on your escrow statement is due a look, we compare quotes from multiple licensed Texas carriers in one short form, with no obligation. Each insurer is solely responsible for its own products. 📞 Talk to Credify 24/7.