You have a legal right to cancel private mortgage insurance, and most homeowners pay it longer than they have to because they’re waiting for the wrong number.
Here is the part that costs people money. Under federal law, the threshold is based on what your home was worth when you bought it, not what it’s worth now. Your house appreciating $80,000 does not move you closer to cancellation. The amortization schedule does.
When does PMI go away automatically?
At 78% of the home’s original value, without you doing anything.
The Homeowners Protection Act requires your servicer to terminate PMI on the date your principal balance is scheduled to reach 78% of original value. You have to be current on payments. If you’re behind, termination waits until you catch up.
There’s a second automatic trigger most people never hear about. Your servicer must end PMI the month after you reach the midpoint of your loan’s amortization schedule, which on a 30-year note is year fifteen, regardless of your balance.
These rules apply to single-family principal residences that closed on or after July 29, 1999. FHA and VA loans work differently, which is the next section.
Can I remove PMI without refinancing?
Yes, and refinancing to drop PMI is usually the expensive way to do it.
At 80% of original value you have the right to request cancellation, and your servicer is legally required to grant it if you meet four conditions:
- You make the request in writing
- You have a good payment history and are current
- You can certify there are no junior liens, such as a second mortgage or a HELOC
- You can show the property hasn’t declined below its original value
The first date you’re eligible appears on the PMI disclosure form you received at closing. If you can’t find it, your servicer has it.
Refinancing replaces a loan you already have at a rate you already locked, and it carries its own closing costs. Before you go that route, our note on what a refinance does to your credit and your costs covers what you’re actually trading.
What does “original value” mean?
The lower of your contract price or your appraisal at purchase. If you refinanced, it’s the appraised value at the refinance.
This is the sentence that surprises people, so it’s worth sitting with. A homeowner who bought at $350,000 and watched the house climb to $430,000 still has a federal right measured against $350,000. Four years of appreciation, worth nothing under the HPA.
Appreciation can still get you there, but through a different door. Loan investors set their own policies for cancellation based on a current appraisal, with minimum seasoning periods and stricter equity thresholds. That isn’t a right, it’s a policy, and it varies by who owns your loan. Your servicer can tell you which rules apply and what the new appraisal will cost you, since you pay for it.
| Route | Threshold | Is it a right? | What it takes |
|---|---|---|---|
| Automatic termination | 78% of original value | Yes, by federal law | Be current on payments |
| Midpoint termination | Halfway through the loan term | Yes, by federal law | Be current on payments |
| Requested cancellation | 80% of original value | Yes, if conditions are met | Written request, no junior liens |
| Based on current value | Set by the loan investor | No, it’s a policy | New appraisal, at your cost |
How do you get rid of PMI faster?
You pay down principal, and the calendar moves up.
Extra principal payments reach the 80% mark ahead of the scheduled date, and the right to request cancellation moves with them. This is the one lever fully in your hands, and unlike appreciation it counts under federal law.
Two things to watch. Confirm with your servicer that extra payments are being applied to principal, not held or applied to the next month’s payment. And know your number before you start, because paying down toward a target you guessed at is how people overshoot by a year.
How do you get rid of PMI on an FHA loan?
Usually you don’t. You refinance out of it.
FHA loans carry mortgage insurance premiums that follow HUD’s rules, not the Homeowners Protection Act, and on many FHA loans the premium is not cancellable by paying down the balance. That’s a structural difference, not a technicality, and it’s the reason a borrower with strong equity may still be paying mortgage insurance years in.
The path out is usually a refinance into a conventional loan once there’s enough equity to qualify without PMI. Whether that math works depends on the rate you’d be leaving, the rate you’d be taking, and the closing costs. HUD has been revising FHA policy recently, so confirm the current rules on your specific loan with your servicer.
We refer our clients to a mortgage broker who can run the numbers on your file. You are free to work with any lender you choose.
What is it worth?
On a $400,000 purchase with 5% down, PMI commonly runs somewhere between $100 and $250 a month depending on your credit profile and coverage. Removing it two years early is real money, and it requires one letter.
Which makes PMI the rare expense that ends because you asked. Most of them just keep going.