Private mortgage insurance (PMI) is a policy your lender requires on a conventional loan when you put less than 20% down, and it protects the lender, not you. The Homeowners Protection Act lets you ask for PMI removal once the mortgage balance falls to 80% of the home's original value; coverage ends automatically at 78%.
What decides when your PMI goes away
- You can ask your lender to drop it once the loan balance hits 80% of the original value (purchase price or appraised value, whichever is lower).
- It stops on its own at 78% on the original payment schedule, if your account is current.
- FHA loans carry MIP instead, often for the life of the loan unless you refinance.
What is private mortgage insurance?
Private mortgage insurance is a type of insurance that a lender requires on a conventional mortgage when the down payment is below 20% of the home's value. The policy covers the lender's loss if the borrower defaults and the property sells for less than the loan balance. You pay for it, but you are not the insured party: PMI does nothing to protect you if you lose your job or fall behind.
The cost of PMI depends on your credit score, your loan-to-value (LTV) ratio and the loan term. Freddie Mac estimates that homeowners typically pay $30 to $70 monthly for every $100,000 borrowed. On a $300,000 mortgage loan, that means roughly $90 to $210 added to the monthly mortgage payment, which is why getting it removed is one of the first personal finance questions a new homeowner asks. If you are still comparing loan products, our overview of mortgage loan types, rates and approval explains how down payment size changes the total cost.
PMI comes in several versions, and the type you have decides whether it can be canceled at all:
- Borrower-paid monthly PMI: the most common option, added to each mortgage payment and covered by the standard rules of the Homeowners Protection Act.
- Single-premium PMI: one lump sum when the loan funds, in cash or financed into the loan. There is nothing left to cancel, and refunds are rare.
- Split-premium PMI: part upfront, the rest monthly. Only the monthly portion stops.
- Lender-paid mortgage insurance (LPMI): the lender pays and charges you a higher interest rate instead. That rate stays for the life of the loan, so the only way out is refinancing.
When PMI applies to a loan
PMI applies to conventional loans, meaning mortgages not insured by a government agency, when the original loan amount is above 80% of the property value. Lenders measure that value as the lower of the purchase price or the appraised value when the loan was made. Buy a home for $400,000 that appraises at $390,000, and the lender works from $390,000.
Other loan programs cover the lender against default risk in their own way:
- FHA loans charge a mortgage insurance premium (MIP) set by the Federal Housing Administration, both upfront and annually.
- VA loans have no monthly mortgage insurance but charge a one-time funding fee, with exemptions for some veterans.
- USDA loans charge an upfront guarantee fee and an annual fee that lasts for the life of the loan.
- Jumbo and portfolio loans depend on the lender, and some waive PMI in exchange for a higher rate.
Before you search for a lender or compare offers from your bank, it helps to know that PMI is not a penalty. It lets many buyers purchase years earlier than they could by saving a full 20%, and a buyer who waits may watch prices rise faster than their savings. Our step-by-step home buying guide covers how to weigh a smaller down payment against the extra monthly cost.
When can I remove PMI from my mortgage?
You can remove PMI when your loan balance reaches 80% of the original value of the home, and it must end automatically at 78%. These dates come from the Homeowners Protection Act of 1998 (HPA), which applies to borrower-paid PMI on conventional loans for a primary residence closed on or after July 29, 1999. The Consumer Financial Protection Bureau (CFPB) enforces it and publishes consumer guidance in plain language.
| Trigger | LTV based on original value | Who acts | Extra payments count? |
|---|---|---|---|
| Homeowner asks | 80% | You, in writing | Yes |
| Automatic termination | 78% | Servicer, no request needed | No, scheduled date only |
| Final termination | Midpoint of the term | Servicer | Not relevant |
Asking to cancel at 80%
Once your principal balance falls to 80% of the original value, you have the right to ask your servicer to cancel PMI. Your loan documents include a PMI disclosure with the date the balance is scheduled to hit 80%, based on the amortization schedule. If you make additional principal payments, you get there sooner and can ask for it to be removed early. The servicer checks your payment history and may ask for proof that the home has not lost value.
Automatic termination at 78%
If you do nothing, the servicer must stop PMI on the date your balance is first scheduled to hit 78% of the original value, provided you are current on payments. This date is fixed by the original schedule, so extra payments do not move it forward. That is the main reason to act at 80% rather than wait: the gap is often a year or more of extra cost.
Final cutoff at the halfway point
Even when the loan never gets to 78%, for example after a loan modification or on a high-risk loan, PMI must end right after the midpoint of the loan term, if you are current. On a 30-year fixed rate mortgage, that is after year 15.
What are the requirements for PMI removal?
To remove PMI at 80%, the law and investor guidelines set a short list of requirements. A borrower who meets all of them should get a yes; one missing item is enough for a refusal.
- A written request sent to your loan servicer, not a phone call.
- A good payment history: no payment 30 days or more late in the past 12 months, and none 60 days or more late in the past 24 months.
- Current payments on the day of the request.
- No subordinate liens, such as a home equity line of credit or second mortgage, unless the lender accepts them.
- Proof the value has not declined below the original value, which may require a new appraisal at your expense.
Loans closed before July 29, 1999 are not covered by the HPA, but most servicers still follow similar rules set by Fannie Mae and Freddie Mac. If your loan was sold to one of them, the investor rules, not your original lender, decide the outcome. Your servicer can tell you who owns the loan, and the CFPB also lets you look this up.
How to get rid of PMI faster
You can get rid of PMI before the scheduled date by building equity faster than the amortization schedule does it for you. Three methods reduce the wait, and each has a cost.
Extra principal payments. Paying even $100 or $200 more each month against principal shortens the path to 80%. Before you do, compare that return with the rest of your financial picture: a balance on credit cards at 20% interest, or an auto loan or personal loan at a high rate, usually deserves the money first. Cash earning little in a money market account is a better source. A student loan at a low fixed rate can often wait.
A new appraisal based on current value. If your local market has seen a strong price increase, your equity may already be above 20% even though the balance is not. Fannie Mae's servicing rules allow cancellation based on current value when the loan is at least two years old: the LTV must be 75% or less for loans between two and five years old, and 80% or less after five years. Improvements such as a kitchen remodel can count too. You cover the appraisal fee, so ask the servicer which appraiser they accept before you pay for one.
Refinancing. If rates have dropped or your home value has risen, refinancing into a new loan at 80% LTV or less removes PMI completely. Refinance your mortgage only when the savings cover the closing costs, which Freddie Mac puts at roughly 2% to 5% of the loan amount. Refinancing to escape $120 of monthly PMI rarely pays if it also gives up a lower rate.
A worked example of the cost of PMI and the removal dates
Take a purchase price of $400,000 with 10% down, a $360,000 loan at a 6.5% fixed rate over 30 years. The monthly payment for principal and interest is about $2,275, and PMI adds roughly $110 to $250 using the Freddie Mac range.
- 80% of the original value is $320,000. On the original schedule, the loan reaches that balance after about 94 months, a little under eight years.
- 78% is $312,000, hit after about 109 payments, roughly nine years.
- The midpoint, year 15, only matters if something delays the other two dates.
Asking at 80% instead of waiting for the 78% cutoff saves around 15 payments of PMI, or roughly $1,600 to $3,700. Adding $200 a month to principal from the start would bring the 80% date forward by more than two years. Use a mortgage calculator with an amortization schedule to run your own numbers; the dates shift a lot with the rate and the original loan balance.
FHA mortgage insurance is not the same as PMI
FHA mortgage insurance premium rules are stricter than PMI, and the 80% and 78% rights do not apply. For FHA loans with case numbers assigned on or after June 3, 2013, MIP lasts 11 years if the original down payment was 10% or more, and for the life of the loan if it was less. Most FHA borrowers put down 3.5%, so most pay MIP until the loan is paid off or replaced.
Since March 2023, the annual MIP for most new FHA loans is 0.55% of the balance, down from 0.85%, plus an upfront charge of 1.75% usually financed into the loan. For many owners, the practical route out of FHA mortgage insurance is refinancing into a conventional loan once they hold 20% equity. That new loan has no PMI, but it is priced on your credit score, so check your credit before you apply.
How to ask your servicer to cancel PMI
Start by pulling your latest mortgage statement and the PMI disclosure from your loan file. Then follow these steps:
- Find the dates. Look for the scheduled 80% and 78% dates in your loan documents, or ask the servicer to send them.
- Contact the servicer. Call, email or log in to learn their process for removing PMI, which appraisers they accept and where to send the letter.
- Write the letter. Keep the content simple: loan number, property address, a clear demand to cancel PMI under the Homeowners Protection Act, and a statement that you meet the payment and lien requirements.
- Order the appraisal if required. Use the servicer's appraiser to avoid paying twice.
- Follow up in writing. Servicers must refund any unearned PMI within 45 days after it ends. Check that the next monthly statement shows the lower payment.
Keep copies of everything. Servicers handle your financial data under privacy and security rules, but a lost letter still delays removal by months. If the servicer refuses without a valid reason, contact the CFPB and file a complaint; the bureau reviews servicer responses. A borrower who changes careers, moves or plans to sell soon should also run the math: if you expect to sell within a year, the equity you have built matters more than the premium, and our advice on selling a home for top dollar shows how that equity turns into cash when the sale goes through.
Common questions about PMI removal
- How to calculate PMI?
- Multiply the loan amount by the annual PMI rate quoted by your lender, then divide by 12. A $250,000 loan at a 0.5% rate costs about $104 monthly. The rate depends mostly on credit score and LTV ratio.
- Does removing PMI affect my credit score?
- No. PMI removal changes your monthly payment, not your credit report, and the loan stays in good standing.
- Can lender-paid mortgage insurance be removed?
- Not directly. LPMI is built into the interest rate, so the only way to stop paying it is refinancing or selling the home.
- Does PMI removal apply to investment property?
- The HPA covers a primary residence. For a second home or rental, the investor rules apply, and they often require a lower LTV or a longer seasoning time.
For more financial and legal resources written for owners, including our mortgage and banking guides, explore the rest of our mortgage section. We also aim for accessibility on every page, so if a table or example is hard to read on your device, the same figures appear in the text around it.