How to Remove PMI

PMI is not permanent. If you put down less than 20% and are now paying private mortgage insurance every month, you can remove it — and you should, because it is money you pay to protect the lender with zero benefit to you. Here are the four ways out, in order of how much effort each takes, and the exact rules that govern when your lender must cancel it.

Know which insurance you have first

This matters, because the removal rules differ completely:

• Conventional PMI — the "private mortgage insurance" on conventional loans. This can be cancelled. Everything below applies to it.
• FHA MIP — FHA loans use a different insurance. If you put down less than 10%, the annual MIP lasts the life of the loan and cannot simply be cancelled — the exit is refinancing into a conventional loan.

If your loan statement says "MIP" and you have an FHA loan, skip to the refinance section. If it says "PMI" on a conventional loan, read on.

Method 1: Automatic termination (do nothing)

Federal law (the Homeowners Protection Act) requires your lender to cancel PMI automatically when your balance reaches 78% of the original home value — 22% equity — based on the original amortization schedule, as long as you are current on payments. No request, no appraisal, no cost. The lender must do it on its own.

The catch: "based on the original schedule" means this only happens on the date your scheduled payments would reach 78% LTV. If you make extra payments or your home appreciates, you can get there far sooner — but then you must request it yourself rather than waiting.

Method 2: Request cancellation at 20% equity

You can request PMI cancellation when your balance reaches 80% of the original value — 20% equity — if you are current on payments and have a good payment history. This lets you act sooner than the automatic 78% threshold.

The process:

1. Confirm your equity. Check your loan balance against 80% of your original purchase price or appraised value.
2. Send a written request to your servicer asking to cancel PMI.
3. Pay for an appraisal if required. Lenders may want a current appraisal (typically $400 to $600) to confirm the home has not lost value.

The appraisal can work for or against you. If your home value has held or risen, you clear the bar and cancel. If values have dropped, you may be denied and stuck with PMI a while longer.

Method 3: Use appreciation to cancel early

If your home has appreciated — common in fast markets — you may reach 80% LTV well before the scheduled date. In that case you can request cancellation based on the current value rather than the original value. This is the fastest path for buyers whose homes jumped in value.

The rules: most lenders require at least two years of on-time payments before they will consider a current-value (appreciation-based) cancellation, and you will pay for the appraisal. If your home rose enough to put you under 75% to 80% LTV, this can shave years of PMI off your loan.

Method 4: Refinance out of PMI

If your home appreciated quickly, a refinance can remove PMI and possibly lower your rate in a single move. This is also the primary exit for FHA borrowers stuck with lifetime MIP — refinancing into a conventional loan once you have 20% equity eliminates it.

Run the break-even math before refinancing just to drop PMI. If PMI is costing you $200 a month and refinancing costs $6,000, your break-even is 30 months — worth it only if you will stay past that. If your rate would also drop meaningfully, the case gets much stronger.

What you should not do

• Do not wait for the lender to volunteer. Automatic cancellation at 78% is years later than the 80% threshold you can request. Request it the moment you hit 20% equity.
• Do not confuse PMI with MIP. FHA MIP under 10% down cannot be cancelled — plan to refinance instead.
• Do not stop making payments. Cancellation requires a clean payment history. A single late payment can delay your request.

Frequently asked questions

When will PMI be automatically removed?

At 22% equity (78% loan-to-value) on the original amortization schedule, as long as you are current. You can request it sooner at 20% equity.

How much does it cost to remove PMI?

Automatic cancellation is free. A requested cancellation may cost $400 to $600 for an appraisal. Refinancing costs 2% to 5% of the loan amount.

Can I remove PMI if my home value went up?

Yes, through a current-value appraisal. Most lenders require at least two years of on-time payments first, and the new value must put you at or below 80% LTV.

Why won't my lender cancel my PMI?

You may not have hit the equity threshold, you may have a late payment, your home may have dropped in value, or you may have an FHA loan with lifetime MIP. Ask your servicer for the specific reason.

Our HomeMath mortgage calculator shows your exact PMI amount, so you know precisely what you will save when it is removed.