Removing PMI. Three doors. Different keys.
If you put less than 20% down on a conventional loan, you're paying private mortgage insurance — typically $80 to $300+ a month on top of your principal and interest. You don't have to keep paying it forever. Federal law gives you three paths to remove it: automatic termination at 78% LTV, borrower-requested cancellation at 80% LTV, or refinance into a no-PMI loan. Here's the math on which path is fastest for you, when paying for a new appraisal pays off, and the LPMI trap that many borrowers don't realize they're in.
What brings you here today?
When does your PMI go away?
Enter your loan details and we'll show all three removal paths side-by-side: when it auto-terminates by federal law, when you can request early cancellation, and how much you'd save by refinancing today (if rates allow). Plus: how aggressive principal prepayment changes the timeline.
Five inputs. Three paths quantified.
Each timeline, side by side.
With no extra principal, your LTV reaches the 80% request threshold in month 95 (~7.9 years), and 78% automatic termination in month 109. Add even $100/month in extra principal to pull both dates forward by months and save real PMI dollars. Move the extra-principal slider to see how aggressive prepayment accelerates the timeline.
Calculations follow the federal Homeowners Protection Act (HPA) of 1998: 78% automatic termination based on original property value, 80% request based on original value, with good payment history. For PMI rate: typical conventional PMI runs 0.30-1.50% annually depending on FICO and LTV; check your loan's monthly mortgage insurance line item.
Three doors. Each opens differently.
The federal Homeowners Protection Act gives you specific rights, but you have to know how to use them. Most borrowers leave money on the table by waiting for path one when path two or three would be faster.Here's what each path actually requires — and which one fits your situation.
Automatic Termination
Your lender is required by federal law to cancel PMI when your loan balance reaches 78% of the original purchase price — based on the scheduled amortization. No request needed. You don't have to do anything. But this is the slowest path.
Borrower-Requested Cancellation
Your federal right — you can request PMI cancellation when your balance reaches 80% of original value. Lender must comply if you meet the conditions. About 18-24 months earlier than waiting for automatic.Most borrowers don't know to ask.
Refinance to No-PMI Loan
Replace your current loan with a new conventional loan at 80% LTV or below — no PMI on the new loan. Most useful when home appreciation has pushed your equity past 20% and current rates make a refi attractive on its own merits.
Did your loan officer say "no PMI"? Read your closing docs.
There are two flavors of conventional mortgage insurance. Borrower-Paid MI (BPMI) is the kind everyone knows — a separate monthly line item on your mortgage statement labeled "PMI" or "Mortgage Insurance." It cancels under HPA rules at 78%/80% LTV.
Lender-Paid MI (LPMI) is different. The MI premium is baked into your interest rate — typically a 0.25-0.50% rate bump — instead of charged as a separate line item. There's no "PMI" line on your statement. Some borrowers (and some loan officers) describe LPMI loans as "no PMI loans" because there's no separate fee.
The trap: LPMI doesn't follow HPA rules. The rate bump is permanent for the life of the loan. When you reach 78% or 80% LTV, your rate doesn't drop. The only way to remove LPMI is to refinance into a new loan — meaning you pay closing costs again to escape an MI structure that BPMI borrowers escape for free.
LPMI is sometimes the right choice — for borrowers who plan to refinance or sell within 5-7 years anyway, the lower monthly payment can win on cash flow. But it's almost always pitched as the "no PMI" option without explaining the lifetime trade. If you're not sure which kind you have, look at your loan estimate or closing disclosure: BPMI shows a separate "Mortgage Insurance" line in the monthly payment breakdown; LPMI shows a slightly higher interest rate and no MI line.
If you're shopping a new mortgage and a loan officer pitches "no PMI" without specifying LPMI vs. piggyback (80/10/10) vs. 20%-down — ask explicitly which structure they mean. The answer affects your lifetime cost meaningfully.
If you're 10+ years into an LPMI loan and have 25%+ equity, the math for refinancing into a no-MI conventional probably works in your favor. Run break-even: closing costs divided by monthly savings from removed rate-bump. Unlike BPMI, waiting doesn't make LPMI go away — only refinancing does.
Not all MI is removable.
Conventional loans aren't the only program with mortgage insurance. FHA, USDA, and VA each have their own MI structure.Some can be removed; some can't. Here's the honest breakdown.
| Loan Type | MI Structure | How It Removes |
|---|---|---|
| Conventional + BPMI The standard case | Monthly premium 0.30-1.50% annually based on FICO and LTV. Charged as separate line item. | Auto-cancels at 78% LTV (HPA). Borrower can request cancellation at 80% LTV. Three paths above apply. |
| Conventional + LPMI The hidden case | No monthly premium — instead, rate is 0.25-0.50% higher than equivalent BPMI loan. | Doesn't cancel. Rate-bump is permanent. Only refinance removes it. |
| FHA (post-June 2013) The most common FHA case | 0.55% annual MIP plus 1.75% upfront UFMIP. With less than 10% down, MIP runs the life of the loan. | Doesn't cancel. Only refinance into conventional removes it. When you have 20% equity, refi out. |
| FHA (post-June 2013, 10%+ down) The exception | Same 0.55% annual MIP, but... | MIP drops at 11 years. Automatic — no request required. Patience pays. |
| FHA (pre-June 2013) The grandfathered case | Different older MI rules. Cancellation feature based on LTV. | Cancels at 78% LTV after 5 years — if 10%+ down. Otherwise, original-schedule cancellation. Don't streamline this without doing the lifetime math first. |
| USDA Rural Development | 0.35% annual guarantee fee plus 1.0% upfront. Functions like permanent MI on conventional terms. | Doesn't cancel. Refinance to conventional removes it. Less aggressive removal-need than FHA — fee is small. |
| VA For veterans | No monthly MI. Funding fee paid upfront only. 2.15-3.30% on purchase, 0.50% on IRRRL refi. | No MI to remove — never had it. VA loans are uniquely free of monthly MI. Service has its rewards. |
Should you pay for a new appraisal?
If your home has appreciated meaningfully since purchase, getting a new appraisal can let you cancel PMI based on current value rather than waiting for amortization on original value. It's a $500-$800 gamble that often pays off 5-10x — but not always.Here's when to take it.
When reappraisal pays off
The appraisal route is fastest when home appreciation has outpaced your scheduled amortization — common in the strong housing markets of recent years.
- You bought 2-4 years ago in a strong market (10%+ appreciation total)
- Your local comps show clear value above 80% LTV math
- You're paying $150+/month in PMI
- You don't plan to refinance soon (no other reason to do an appraisal)
When reappraisal doesn't pay off
Sometimes the appraisal comes back lower than expected — and you've spent $700 without removing PMI. Or you're close to the natural threshold anyway.
- You're within 12 months of natural 78% auto-cancellation
- Your local market is flat or declining
- You're paying less than $80/month in PMI
- You're planning to sell or refi within 18 months anyway
Six honest answers about PMI removal.
The questions servicers usually don't volunteer.
Because federal law doesn't require them to. The Homeowners Protection Act distinguishes between two trigger points:
78% LTV — automatic. Lender must cancel without you requesting. Based on original value, scheduled amortization.
80% LTV — request only. You have the right to ask, but the lender doesn't have to act unless you submit a written request and meet conditions (current on payments, clean recent payment history, sometimes an appraisal at your cost).
Lenders prefer that you don't ask — every month of PMI is revenue for the mortgage insurer (and indirectly stable risk for the lender). If you want PMI cancelled at 80%, you must request it. Submit a written request to your servicer, asking specifically for PMI cancellation under HPA borrower-requested termination. Most servicers have a form. Calling first to verify the current process and any documentation requirements is sensible.
Yes — and it's one of the highest-ROI uses of extra cash for many borrowers. Every dollar of extra principal moves you closer to the 78%/80% threshold. Use the calculator above to see exact months saved.
The math is compelling: for a typical borrower paying $200/month in PMI, accelerating cancellation by 18 months equals $3,600 in PMI savings. If extra principal of $200/month accomplishes that acceleration, you've earned an effective return roughly equal to your mortgage interest rate plus the PMI rate combined — often 7-9% risk-free.
Compare that to keeping the cash in a 4.5% savings account. Extra-principal-toward-PMI-removal often beats most other uses of extra cash from a pure-return standpoint.
Watch out: some loans have prepayment penalties in their first 1-3 years. Check your note before accelerating large principal payments. (Most modern conventional loans don't have prepayment penalties, but verify.)
Yes, but only with a new appraisal — and the rules are stricter. The HPA's 78% auto-cancellation uses original value (you can't accelerate it through appreciation). The 80% borrower-requested path also defaults to original value, but lenders typically allow current-value evaluation if you pay for an appraisal.
Some servicers have additional requirements when using current value:
• Loan must be at least 2 years old for current-value evaluation (most servicers).
• Required LTV thresholds may be different — some servicers require 75% current LTV instead of 80% when using appreciation-based valuation.
• The appraisal must come from the servicer's approved list. An independent appraisal you ordered for another purpose may not count.
Always call your servicer first and ask: "What's the current process to cancel PMI based on current property value?" Get the specific requirements before paying for an appraisal. $700 spent on an appraisal that doesn't qualify under your servicer's rules is $700 wasted.
Same general idea — insurance that protects the lender if you default — but they apply to different programs and have different rules.
PMI (Private Mortgage Insurance) applies to conventional loans with less than 20% down. Issued by private companies (MGIC, Genworth, Radian, etc.). Cancellable per HPA at 78%/80% LTV.
MIP (Mortgage Insurance Premium) applies to FHA loans. Issued by HUD. For loans originated post-June 2013 with under 10% down, MIP runs the life of the loan and is not cancellable. With 10%+ down, drops at 11 years.
Both have an annual percentage cost (paid monthly) plus FHA also has an upfront premium (UFMIP, 1.75% of loan amount, financed into balance). USDA's "guarantee fee" is structurally similar to MIP. VA has no monthly MI — only an upfront funding fee.
The key difference for removal: PMI is removable through three paths described above. MIP on most FHA loans is not removable except through refinancing to conventional. If you started with FHA and have built equity, refi to conventional is often the only way to drop MIP entirely.
Typical conventional refi runs $3,000-$6,000 in total closing costs on loans up to ~$500K, scaling up for larger balances. Major line items: appraisal ($500-$800), title insurance ($1,000-$2,500 depending on state and loan size), origination/underwriting fees ($800-$1,500), recording fees ($75-$300), and various smaller items.
The break-even math: closing costs divided by monthly savings. For a borrower paying $200/month PMI plus a 0.5% rate reduction worth $130/month, total monthly savings of $330. Closing costs of $4,500 break even in 14 months. Anything beyond month 14 is pure savings.
Two strategies to reduce upfront cost:
• "No-cost refi" — lender absorbs closing costs in exchange for a slightly higher rate (typically +0.125-0.25%). Mathematically often inferior to paying costs upfront, but eliminates the upfront cash requirement.
• Rolling closing costs into loan balance — same as "no-cost" but more transparent. You pay slightly more per month to service the larger loan, but no out-of-pocket cost.
For a borrower with strong cash flow, paying closing costs upfront usually wins. For tight-cash situations, no-cost or roll-in keeps liquidity.
That's an unusual structure called Split Premium MI. Some PMI is paid as an upfront premium (sometimes called "single premium MI") at closing, and a smaller portion is paid monthly. This was more common in the mid-2010s; less so now.
Removal rules depend on which portion is which. The monthly portion typically follows BPMI rules — cancellable per HPA. The upfront-paid portion is gone (paid once, not refunded if you cancel monthly later).
Single Premium MI (SPMI) — paid entirely upfront at closing, no monthly MI. Once paid, it's done; nothing to cancel. The upside: no monthly MI line item ever. The downside: if you sell or refi within a few years, that upfront premium is wasted.
If you're not sure what kind of MI you have, look at:
1. Your closing disclosure ("Mortgage Insurance" line in Section A and Section F)
2. Your monthly mortgage statement ("PMI" or "Mortgage Insurance" line)
3. Call your servicer and ask directly: "Is my mortgage insurance BPMI, LPMI, single premium, or split premium?"
The answer determines whether the cancellation paths in this article apply to you.
Wondering if refi makes sense? Let's run your numbers.
If your home has appreciated and you're tired of the PMI line on your statement, sixty seconds tells us whether refinance economics work for your situation. If they don't, we'll say so and recommend the borrower-requested cancellation path or appraisal-driven approach instead. Sometimes the right answer is "don't refi."