What Is Private Mortgage Insurance (PMI)?
Private mortgage insurance protects the lender (not you) if you default on your mortgage. It's required on conventional loans when your down payment is less than 20% of the home's purchase price. PMI typically costs 0.5%–1.5% of the loan amount annually, added to your monthly payment.
On a $350,000 loan at 0.85% PMI, you're paying about $248 per month purely to insure the lender's risk. Over the years until you reach 20% equity, that adds up to thousands of dollars. The good news: unlike FHA mortgage insurance, conventional PMI is temporary. Once you build enough equity, you can get rid of it.
How to Remove PMI: Three Paths
1. Request removal at 80% LTV. Once your actual or originally scheduled balance reaches 80% of the original property value, you can request cancellation in writing. Approval requires good payment history, current payments, no junior liens, and evidence the property value has not declined. Original value is generally the lower of the purchase price and original appraisal. Appreciation-based investor rules are separate and are not modeled by this calculator.
2. Automatic cancellation at 78% LTV. Under eligible borrower-paid PMI terminates when the original schedule reaches 78% of original value, or after the original loan midpoint if earlier, provided payments are current. Extra principal and appreciation do not advance this scheduled date. These estimates exclude high-risk loans, lender-paid insurance, and other exceptions. Confirm your dates with your servicer and the CFPB guidance.
3. Refinance. If your home has appreciated 10%+ since purchase, refinancing into a new loan at or below 80% LTV can eliminate PMI entirely. This approach makes sense when rates have dropped or your home value has risen enough that the savings outweigh refinancing costs.
How to Cancel PMI Faster
Make extra principal payments. Even an extra $200/month toward principal can shave years off your PMI timeline. Use our calculator above to see the "lump sum to reach 80%" amount. Paying it can make a cancellation request eligible sooner; it does not guarantee immediate removal or servicer approval.
Get a new appraisal. If your home has appreciated since purchase (renovations, market growth), a new appraisal could show a current value that puts your LTV below 80%. Some lenders allow cancellation based on current value rather than original purchase price, especially if you've owned the home for 2+ years.
Home improvements that add value. Kitchen and bathroom renovations, adding a bedroom, or finishing a basement can increase your appraised value. Focus on improvements with high return-on-investment in your market.
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Frequently Asked Questions
- When does PMI automatically cancel?
- For eligible borrower-paid conventional PMI, automatic termination follows the date the original amortization schedule reaches 78% of original value, or the month after the original midpoint if earlier, assuming payments are current. Extra principal and appreciation do not advance that scheduled date. Requested cancellation at 80% has separate conditions. FHA MIP follows different date and original-LTV rules.
- How do I reach 80% LTV faster?
- Extra principal can reach 80% of original value sooner and may support a written cancellation request. Good payment history, current payments, no junior liens and no property-value decline are also required. Appreciation-based cancellation uses separate investor or servicer rules, which this calculator does not model.
- How much does the appraisal cost and is it worth it?
- Ask the servicer what evidence it requires and what it costs before ordering an appraisal. An appraisal alone does not require PMI cancellation. Original-value and appreciation-based cancellation have different eligibility conditions; the calculator does not estimate appraisal fees or guarantee savings.
- Does FHA allow PMI removal?
- FHA uses MIP, not conventional PMI. For cases assigned on or after June 3, 2013, annual MIP generally lasts 11 years at original LTV of 90% or below, or the loan term above 90%, including 15-year loans. Historical cases and special programs can differ. Refinancing may end the old coverage, but compare new insurance, fees and interest before deciding.
- How much is PMI typically?
- Average PMI on a conventional loan is 0.3% to 1.5% of the loan amount per year, billed monthly. On a $400k loan, that's $100 to $500/month. Your specific rate depends on credit score and LTV. A 760 credit score at 90% LTV pays roughly 0.3%, while a 620 credit score at 97% LTV pays closer to 1.2%. Lender-paid PMI (LPMI) rolls it into a higher interest rate instead.
- Should I pay down principal to eliminate PMI faster?
- Extra principal may accelerate eligibility for requested cancellation, but payment alone does not guarantee approval. Compare the conditional premium savings and interest reduction against the cash you would use, other debts and liquidity needs. This tool leaves the original automatic-termination schedule unchanged and assumes the existing loan has not been modified.