If you bought a home with less than 20% down on a conventional loan, you’re probably paying private mortgage insurance (PMI) every month — and you’d like it gone. The good news: federal law gives you a clear path. You can request cancellation once your loan balance reaches 80% of the home’s original value (80% loan-to-value, or LTV), and your servicer must automatically terminate PMI when the balance is scheduled to hit 78% LTV, as long as you’re current on payments.
That 80% vs. 78% distinction is the single most important thing to understand, and most homeowners get it wrong. Below is exactly how each route works, plus faster ways to drop PMI through extra payments, a new appraisal, or a refinance.
Education, not advice. This is general educational information, not personalized financial or legal advice. We are not licensed mortgage or insurance professionals. Confirm your specific situation with your loan servicer.
What are the rules for getting rid of PMI?
The rights below come from the federal Homeowners Protection Act of 1998 (HPA), also called the PMI Cancellation Act, which the Consumer Financial Protection Bureau (CFPB) supervises and enforces. The HPA applies to most conventional loans on a single-family principal residence. Here are the main routes at a glance:
| Route | Trigger / requirement | Who acts | Source |
|---|---|---|---|
| Request cancellation | Balance scheduled to reach 80% of original value; good payment history; no junior liens; you may need to prove current value | You (written request) | CFPB |
| Automatic termination | Balance scheduled to reach 78% of original value; loan must be current | Servicer (automatic) | CFPB |
| Final (midpoint) termination | The month after the midpoint of your amortization schedule (e.g., year 15 of a 30-year loan), if not already cancelled | Servicer (automatic) | CFPB |
| New appraisal | Home value rose enough to put you at ~20–25% equity (servicer/investor rules vary) | You (request + pay for appraisal) | Bankrate |
| Refinance | New loan at or below 80% LTV (no PMI required) | You (apply for new loan) | NerdWallet |
Note that “original value” generally means the lesser of your purchase price or the appraised value at the time you took out the loan — not today’s value. That matters for the automatic routes below.
Three thresholds where PMI must end — and who acts at each
When can you cancel PMI? (the 80% rule)
You have the right to ask your servicer to cancel PMI on the date your principal balance is scheduled to fall to 80% of the original value of your home, according to the CFPB. You can also reach that point early by paying down the loan.
To qualify, the CFPB says you generally must:
- Submit your request in writing.
- Have a good payment history and be current on payments. Per Fannie Mae, a good record typically means no payments 30+ days late in the past 12 months and none 60+ days late in the past 24 months.
- Certify there are no junior liens (such as a second mortgage or HELOC) on the home.
- If asked, show the home hasn’t lost value — your servicer may require an appraisal you pay for.
Because borrower-requested cancellation kicks in at 80% while automatic termination doesn’t happen until 78%, requesting it yourself can save you months of premiums. Don’t wait for the servicer.
When does PMI automatically go away? (the 78% rule)
Even if you do nothing, your servicer must automatically terminate PMI on the date your principal balance is scheduled to reach 78% of the home’s original value, the CFPB explains. This is based on your original amortization schedule, not your home’s current market value, and the only condition is that your loan is current on the termination date.
If you’re behind on payments when that date arrives, PMI is terminated shortly after you bring the loan current.
There’s also a final backstop. If PMI hasn’t ended by the midpoint of your loan’s amortization schedule — year 15 of a 30-year mortgage — the servicer must cancel it the month after that midpoint, regardless of your balance, as long as you’re current. The CFPB calls this final termination.
How do you request PMI removal?
If you’ve built equity faster than your schedule (through extra payments or rising home values), you don’t have to wait for the automatic dates. A practical sequence:
- Check your numbers. Find your current principal balance and your home’s original value. Divide the balance by that value to estimate LTV.
- Call your servicer and ask for their specific PMI cancellation requirements and forms. Investors like Fannie Mae and Freddie Mac set conditions servicers follow, and some allow cancellation at 75% LTV if you’ve owned the home longer.
- Submit a written request once you hit 80% LTV (or sooner if your equity supports it).
- Pay for an appraisal or broker price opinion if the servicer requires proof of value.
According to Investopedia, a written request plus a clean payment record is usually all that’s needed when you’ve reached 80% on the original value.
What if your home’s value went up?
If your area’s prices have risen, you may have reached 20% equity faster than your loan schedule predicts. In that case you can request cancellation based on current value and order a new appraisal. As Bankrate notes, servicers often require more than 20% equity when relying on appreciation rather than paydown — commonly 25% equity if you’ve had the loan two to five years, and 20% after five years. Confirm your investor’s exact threshold before paying for the appraisal.
Can you refinance to drop PMI?
Yes. If you refinance into a new conventional loan and your balance is 80% or less of the new appraised value, the new loan won’t carry PMI. NerdWallet points out this only makes sense if the new interest rate and closing costs leave you better off overall — run the math before refinancing solely to shed PMI.
What about FHA mortgage insurance?
This is where people get tripped up. FHA loans don’t carry PMI — they carry a mortgage insurance premium (MIP), and the HPA cancellation rules above don’t apply.
Per the CFPB and Bankrate, on most FHA loans taken out since June 2013:
- If you put less than 10% down, MIP generally lasts the life of the loan.
- If you put 10% or more down, MIP can be removed after 11 years of on-time payments.
Because MIP usually can’t be cancelled based on equity alone, the common way to escape it is to refinance into a conventional loan once you have 20% equity — at which point you’d avoid PMI entirely. If you’re weighing your options, our guides on what mortgage insurance is and how to avoid paying for it and how much you can borrow for a mortgage can help you plan.
Frequently asked questions
Does PMI go away automatically? Yes. On conventional loans, your servicer must automatically terminate PMI when your balance is scheduled to reach 78% of the home’s original value, and as a final backstop at the midpoint of your amortization schedule, provided you’re current (CFPB).
Should I request cancellation or wait for it to drop off? Requesting is usually better. You can ask at 80% LTV, but automatic termination isn’t until 78% — waiting can mean paying several extra months of premiums for no benefit.
Can extra payments help me cancel PMI sooner? Yes. Paying down principal faster lowers your LTV ahead of schedule, so you can request cancellation at 80% earlier. Just confirm your servicer’s documentation requirements first.
Will I get a PMI refund? You may. The HPA requires servicers to refund unearned PMI premiums after cancellation or termination in some cases. Ask your servicer how any refund is calculated (CFPB).
Is PMI the same as mortgage protection insurance? No. PMI protects your lender if you default. Mortgage protection insurance is a separate product that pays your mortgage if you die or become disabled. They’re unrelated.
The bottom line
For a conventional loan, the rules are simple once you know them: request PMI cancellation at 80% LTV, and your lender must end it automatically at 78% — with a final cutoff at the loan’s midpoint. If your home has appreciated, a new appraisal or refinance can get you there faster. And if you have an FHA loan, remember that MIP plays by entirely different rules, often making a refinance to conventional the cleanest exit.
Sources: Consumer Financial Protection Bureau, Fannie Mae, Freddie Mac, Bankrate, NerdWallet, and Investopedia.