How to Get Rid of PMI (With or Without Refinancing)

By Jerry L Kindig III, NMLS #2397823

Private mortgage insurance (PMI) is the line on your payment that shows up when you buy with less than 20% down on a conventional loan. It protects the lender, not you. A lot of homeowners I talk with want it gone as soon as they can. The good news: for most conventional loans, federal rules give you a clear path to cancel it.

Here is how PMI removal works, when a refinance makes sense, and why FHA mortgage insurance is different. For any refinance payment check, use our mortgage payment calculator. Rates change daily, so I do not quote rates or payment examples here.

What PMI is (and what it is not)

PMI is required on most conventional loans when your down payment is under 20%. It is not the same as homeowners insurance, and it is not the same as FHA mortgage insurance (MIP). If you put less than 20% down, PMI is usually part of the deal until your equity reaches certain levels under the Homeowners Protection Act.

Not every borrower will qualify for a low down payment. Your actual down payment depends on credit, income, the property, and the program.

If you are still deciding between loan types, start with FHA vs conventional or our FHA vs conventional comparison.

When you can ask to cancel PMI (80% loan-to-value)

According to the Consumer Financial Protection Bureau, for many single-family primary homes closed on or after July 29, 1999, you have the right to request PMI cancellation once your principal balance is scheduled to fall to 80% of the home's original value.

"Original value" usually means the lower of the purchase price or the appraisal at purchase. If you refinanced, it is generally the appraised value at that refinance.

Your servicer must grant a valid written request when you:

• Are current with a good payment history
• Certify there are no junior liens (like a second mortgage) on the home
• Can show the property value has not dropped below that original value (an appraisal may be required)

The first date you can request cancellation should be on the PMI disclosure you got at closing. If you cannot find it, call your servicer and ask for the scheduled cancellation date.

Automatic termination at 78% (and at the midpoint)

Even if you never send a letter, the CFPB notes that servicers generally must automatically terminate PMI when your principal balance is scheduled to reach 78% of the original value, as long as you are current. If you are behind, termination usually waits until you catch up.

There is another automatic date: the month after you reach the midpoint of the original loan term. On a 30-year loan, that is after 15 years have passed, even if the balance has not hit 78%. You still need to be current for that midpoint cutoff to apply.

Ways to get rid of PMI without waiting forever

1. Pay the loan down faster. Extra principal payments can bring you to 80% sooner than the original schedule. Ask your servicer how much principal gets you to the cancellation LTV, and confirm any extra payment goes to principal.

2. Ask based on current value. If your home has appreciated, some servicers and investors (including Fannie Mae and Freddie Mac guidelines, which cannot be less favorable than the federal minimums) allow earlier cancellation based on a servicer-approved valuation showing enough equity, subject to investor seasoning and payment-history requirements. Rules and fees vary. Ask your servicer how the valuation must be ordered before you pay for one.

3. Refinance into a loan without PMI. If you have roughly 20% equity now, a conventional refinance can drop PMI by replacing the old loan. Compare closing costs, your new rate environment, and how long you plan to keep the home. Start on our refinance page. If you need cash and also want to rethink the loan, see HELOC vs cash-out refinance so you do not mix those tools up with a simple rate-and-term refi.

On a refinance, a broker can shop multiple lenders the same way as a purchase. See mortgage broker vs bank.

FHA MIP is different from PMI

FHA loans use mortgage insurance premiums (MIP), not PMI. Per HUD guidance for case numbers assigned on or after June 3, 2013, annual MIP duration is based on the original loan-to-value:

• Original LTV of 90% or less: annual MIP generally lasts 11 years
• Original LTV above 90%: annual MIP generally lasts for the full loan term

That means many FHA borrowers who put the minimum down (as little as 3.5% for eligible borrowers) keep annual MIP for the life of the loan unless they refinance out of FHA. Not every borrower will qualify for that minimum down payment. Older FHA loans with case numbers before June 3, 2013 can follow different cancellation rules. Confirm your case number date and MIP schedule with your servicer. Program details are on our FHA page.

What to do this week

Pull your statement, note original value and current balance, and call your servicer. Ask for the 80% request date, the automatic 78% date, and whether a current appraisal can support earlier cancellation. If a refinance looks cleaner, I can run options with you.

FAQ

When can I remove PMI?
On many conventional loans, you can request cancellation at 80% of original value, and PMI often ends automatically at 78% if you are current. Check your PMI disclosure and confirm with your servicer.

Does a higher home value cancel PMI automatically?
Not always. Appreciation can support an earlier request with a new appraisal under some investor guidelines, but automatic termination is usually based on the original value schedule, not today's market value.

Is FHA mortgage insurance the same as PMI?
No. FHA uses MIP with different duration rules. Many post-2013 FHA loans keep annual MIP for 11 years or for the full term, depending on original LTV.

Should I refinance just to drop PMI?
Only if the math works after closing costs and you plan to keep the home long enough. Sometimes paying down or an appraisal request is cheaper than a full refinance.

Want help mapping your PMI or MIP options?

Send me your approximate balance, original purchase price or refinance appraisal, and loan type (conventional or FHA). I will walk through request vs. refinance in plain English. Reach me through the contact page.

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Not all clients will qualify for these products. Eligibility and availability vary by program and borrower. This article is for general information only. It is not a commitment to lend or an offer of credit. Rates and programs change daily and are subject to credit approval, underwriting, and property eligibility.

Neither the Loan Originator nor Loan Factory, Inc. is a government agency or is affiliated with, endorsed by, or acting on behalf of the U.S. Government, the Department of Veterans Affairs (VA), the Federal Housing Administration (FHA), or the U.S. Department of Agriculture (USDA).

Jerry L Kindig III, NMLS #2397823 | Loan Factory, NMLS #320841 | Equal Housing Opportunity