If you’re a homeowner making monthly mortgage payments, you may be carrying private mortgage insurance (PMI). While PMI helps you get into a home with a smaller down payment, it’s an added cost — and most homeowners look forward to the day they can remove it.
The good news: you have the right to remove PMI under certain conditions, and doing so can significantly reduce your monthly mortgage expenses.
Let’s break down what PMI is, how it works, and when you can remove it.
Private Mortgage Insurance (PMI) is typically required when you put down less than 20% on a conventional home loan. It protects the lender (not you) in case you default on your loan.
While PMI helps buyers become homeowners sooner, it comes with a monthly premium — often between 0.5% to 1% of the loan amount annually.
There are three main ways your PMI can be removed: by request, automatically at 78% loan-to-value (LTV), or at the halfway point of your loan term.
You have the legal right to request your lender cancel PMI once your loan balance reaches 80% of your home’s original value (based on the purchase price or original appraisal — whichever is lower).
✅ To qualify for PMI cancellation:
📌 Bonus Tip: If you’ve made extra payments or large lump-sum payments toward your principal, you might reach the 80% threshold faster than scheduled. That means you can request PMI removal earlier — and save money sooner.
Even if you don’t submit a request, federal law requires your lender to cancel PMI automatically once your mortgage balance reaches 78% of the original value of the home — as long as you’re current on your payments.
This process is automatic, but it’s still a good idea to track your loan balance and follow up with your servicer when you’re getting close.
Your PMI must also be canceled once you reach the halfway point of your loan term, regardless of your balance. For a 30-year loan, that’s the start of year 16.
This applies even if you haven’t reached 78% LTV — as long as you’re current on your payments. This rule is especially relevant for borrowers with balloon payments, interest-only periods, or forbearance in their payment history.
If you have an FHA loan, you’re likely paying a mortgage insurance premium (MIP) — which follows different rules. For many FHA borrowers, MIP lasts for the life of the loan unless you refinance into a conventional mortgage.
For VA loans, which are backed by the Department of Veterans Affairs, there’s typically no PMI at all — one of the major benefits of VA financing.
If you’re unsure what type of loan you have, contact your mortgage servicer for details.
Good news: Fannie Mae and Freddie Mac allow for early PMI cancellation under guidelines similar to federal law. These entities may also permit PMI removal if you can prove your home has appreciated significantly, even if you haven’t hit 80% LTV based on the original value.
Ask your servicer about investor-specific rules, especially if your home value has jumped due to market appreciation or renovations.
Private mortgage insurance doesn’t have to be forever. With smart planning and a good understanding of your loan terms, you can remove PMI and reduce your monthly payment — often without the need to refinance.
✅ Track your loan balance regularly
✅ Make extra payments when possible
✅ Contact your servicer when you hit 80% LTV
✅ Stay current on your mortgage
Whether you’re a few years into your loan or just getting started, knowing your rights around PMI can save you thousands over the life of your loan.
Need help reviewing your loan or figuring out when you can drop PMI? Let’s chat — we’ll help you assess your options and decide what’s right for your financial future.
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