When PMI comes off
Private mortgage insurance protects the lender, not you, when you buy with less than 20% down on a conventional loan. Under the federal Homeowners Protection Act, it doesn't last forever. There are three points where it can end, all measured against your home's original value.
- You can ask at 80%. Once your balance is scheduled to reach 80% of the original value, you can request cancellation in writing. If extra payments get you to 80% sooner, you can ask sooner.
- It ends automatically at 78%. Your servicer must cancel PMI when the balance is scheduled to reach 78% of the original value, as long as you're current on payments.
- It ends at the midpoint. PMI must end the month after the halfway point of your loan term, such as year 15 of a 30-year loan, even if the balance hasn't reached 78%.
When you ask at 80%, your servicer can also require a good payment history, confirmation that you have no second mortgage or other liens on the home, and evidence that the home's value hasn't dropped below its original value, often through an appraisal.
Original value
For a home purchase, the original value is generally the lower of the sales price and the appraised value at closing. After a refinance, it is the appraised value at the time of the refinance. These rules cover loans on single-family primary homes closed on or after July 29, 1999.
A worked example
Say you buy a $400,000 home with 10% down, borrowing $360,000 at 7% for 30 years, and pay $150 a month for PMI. The 80% mark is a balance of $320,000, and the 78% mark is $312,000.
| Milestone | Balance | Reached after |
|---|---|---|
| You can ask to cancel (80%) | $320,000 | 8 yrs 5 mo |
| Automatic cancellation (78%) | $312,000 | 9 yrs 7 mo |
| Final termination (midpoint) | Any | 15 yrs 1 mo |
Asking at 80% instead of waiting for automatic cancellation saves 14 months of PMI, or $2,100. Extra payments toward principal move the 80% date even earlier:
| Extra each month | Can ask after | Sooner by | PMI saved |
|---|---|---|---|
| None | 8 yrs 5 mo | — | — |
| $100 | 6 yrs 8 mo | 21 months | $3,150 |
| $250 | 5 yrs 2 mo | 39 months | $5,850 |
| $500 | 3 yrs 9 mo | 56 months | $8,400 |
Figures use this calculator's method (described below). PMI saved counts only the PMI itself; extra payments also save interest, which the mortgage payoff calculator shows.
How to get rid of PMI sooner
Pay down principal
Extra payments count toward the 80% request date, because that test can use your actual balance. They don't change the automatic 78% date, which follows your original schedule. Paying every two weeks is one easy way to add principal; see the biweekly mortgage calculator.
Use a higher home value
If your home has gained value, your servicer may cancel PMI based on a new appraisal instead of the original value. For loans owned by Fannie Mae or Freddie Mac, guidelines have generally required the loan to be at least two years old, with a balance of 75% or less of the current value for loans two to five years old, and 80% or less after five years. Value added by improvements you made may not need the two-year wait. Rules depend on who owns your loan, so ask your servicer what it requires.
Refinance
If your new loan would be 80% or less of your home's current appraised value, you typically won't need PMI on it. Refinancing has closing costs and resets your rate and term, so it usually makes sense only if the new rate is also attractive.
How to ask your servicer
Your PMI disclosure from closing should list the first date you can ask, and your servicer can confirm it. When you're ready, send a written request. A short letter like this one covers what servicers usually need:
[Date] [Servicer name] [Servicer address] Re: Request to cancel private mortgage insurance Loan number: [your loan number] Property address: [your address] I am writing to ask you to cancel the private mortgage insurance on the loan above. Based on my records, the principal balance has reached 80% of the home's original value, which allows me to request cancellation under the Homeowners Protection Act. My payments are current, and there is no second mortgage or other lien on the property. Please tell me if you need an appraisal or any other information to process this request, and confirm in writing once PMI has been removed. Sincerely, [Your name] [Phone or email]
- Keep a copy of the letter and note when you sent it.
- Ask whether the servicer will order an appraisal and who pays for it.
- Check your next statements to confirm the PMI charge is gone.
FHA, VA and other loans
The rules above apply to borrower-paid PMI on conventional loans. Other loan types work differently:
- FHA loans carry a mortgage insurance premium (MIP). For loans made since June 2013, MIP lasts 11 years if you put down at least 10%, and for the life of the loan with less down. Refinancing into a conventional loan is the usual way to drop it sooner.
- VA loans don't charge monthly mortgage insurance. Most borrowers pay a one-time funding fee instead.
- Lender-paid mortgage insurance is built into your interest rate, so there is no separate charge to cancel.
- USDA loans have an annual guarantee fee with rules of their own. Ask your servicer how it applies to your loan.
Source: the Consumer Financial Protection Bureau's guide to removing PMI.
How this calculator works
- Your monthly principal and interest payment comes from the standard fixed-rate formula, using the original loan amount, rate and term.
- The original schedule steps through the loan one month at a time to find when the balance is scheduled to reach 80% and 78% of the original value. The midpoint date is the month after half the term.
- Your projected balance starts from today. It uses your current balance if you enter one, otherwise the scheduled balance, and then applies your regular payment plus any extra.
- The request date is the earlier of the scheduled 80% date and the month your projected balance reaches 80%.
- PMI left to pay and PMI saved multiply the number of monthly payments by your monthly PMI. Real PMI charges can change, so treat these as estimates.
Questions people ask
How do I remove PMI from my mortgage?
Once your balance reaches 80% of your home's original value, send your servicer a written request to cancel it. You'll need to be current on payments and have no second mortgage, and the servicer may ask for an appraisal showing the value hasn't dropped. If you don't ask, PMI ends automatically at 78% or at the loan's midpoint. Extra payments, a new appraisal if your home has gained value, or a refinance can get you there sooner.
Does PMI go away on its own?
Yes. On a conventional loan, your servicer must cancel PMI when your balance is scheduled to reach 78% of the home's original value, or at the midpoint of the loan term, as long as you're current on payments. You can ask for it to be removed earlier, at 80%.
How much equity do I need to remove PMI?
To ask your servicer to cancel PMI, you need 20% equity, measured against your home's original value. That means a balance of 80% of the original value. PMI ends automatically when your original payment schedule reaches 22% equity, a balance of 78%. If your home has gained value, a new appraisal can count instead: Fannie Mae and Freddie Mac guidelines have generally required 25% equity for loans two to five years old and 20% after five years.
Can I remove PMI because my home's value went up?
Often, yes. Many servicers will cancel PMI based on a new appraisal if your balance is a low enough share of today's value. For Fannie Mae and Freddie Mac loans, that has generally meant 75% or less for loans two to five years old and 80% or less after five years. Ask your servicer for its requirements.
Do extra payments help me drop PMI sooner?
Yes, for the 80% request. That test can use your actual balance, so extra principal brings the date forward. The automatic 78% date follows your original schedule and doesn't move.
Do I need an appraisal to cancel PMI?
Your servicer can ask for proof that your home's value hasn't fallen below its original value, and that usually means an appraisal or a valuation it orders. You may have to pay for it, so ask about the cost first.
What if I've had late payments?
A request at 80% can be turned down without a good payment history. Automatic cancellation at 78% still happens once you're current on your payments.
How do I find my PMI cancellation date?
Look for the PMI disclosure you received at closing, which lists the date you can first ask. Your servicer can also tell you, and this calculator estimates it from your loan details.
Can I get rid of PMI without refinancing?
Yes. On a conventional loan, you can ask your servicer to cancel PMI once your balance reaches 80% of your home's original value, and it ends automatically at 78% on your original schedule or at the loan's midpoint. Extra payments get you to 80% sooner, and if your home has gained value, a new appraisal may let you cancel it based on today's value. Refinancing is mainly the way out for FHA loans that carry mortgage insurance for the life of the loan.
Does refinancing get rid of PMI?
It can. If the new loan is 80% or less of your home's current appraised value, you typically won't need PMI. Weigh the closing costs and the new interest rate before deciding.
