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PMI removal walkthrough

Three paths to drop PMI, the requirements lenders actually enforce, and which path saves you the most money.

Last updated April 2026

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If you bought with less than 20% down on a conventional loan, you’re paying private mortgage insurance (PMI) each month. PMI typically runs 0.20% to 1.5% of your loan amount per year — on a $400k loan that’s $67-$500/month going to a third-party insurer to protect the LENDER if you default. None of it builds your equity.

Good news: PMI is cancellable. Three paths exist, and picking the right one can save tens of thousands. Use the PMI Removal calculator to find your earliest cancel date for each.

The three paths

Path 1: Automatic cancellation at 78% LTV

Federal law (the Homeowners Protection Act of 1998, “HPA”) requires the lender to automatically drop PMI when your scheduled balance reaches 78% of the original property value.

Key details:

  • Based on the original schedule, not your actual balance — extra payments don’t accelerate auto-cancel
  • Based on the original property value, not current value
  • You don’t need to do anything; the lender drops it on a specific date set at origination
  • You can ask the lender to confirm the auto-cancel date in writing

For a typical 30-year loan, auto-cancel happens around year 11.

Path 2: Borrower-requested cancellation at 80% LTV (scheduled)

You can request cancellation when your balance reaches 80% of the original price — usually a year or two earlier than auto-cancel.

Requirements (per HPA + servicer rules):

  • You must request it in writing
  • You must be current on the loan (no 30-day late in past 12 months, no 60-day late in past 24 months)
  • The lender will likely ask you to certify there are no junior liens
  • They may charge $50-100 for processing

Extra payments do accelerate this milestone because it’s based on actual balance.

Path 3: Reappraisal at lower current-value LTV (the big win)

If your home has appreciated, you can pay for a new appraisal and request cancellation based on current value. This is often the path that saves the most.

Fannie Mae servicer rules (most common):

  • Loan age 2-5 years: requires 75% current-value LTV
  • Loan age ≥5 years: requires 80% current-value LTV
  • Plus: good payment history (no 30-day late in 12 mo, no 60-day late in 24 mo)
  • Plus: borrower-paid appraisal ($150-600) ordered by the servicer

For accelerated equity (Fannie has a “substantial improvements” exception with shorter timing rules), the threshold is the same but the seasoning rule is shorter if you’ve made documented major improvements.

A worked example

Scenario: You bought a $500k home in early 2024 with 6% down ($30k), borrowing $470k. Today (mid-2026) your balance is around $455k. The neighborhood has appreciated about 3%/yr, so the home is now worth about $531k.

  • Original LTV: 470/500 = 94% (PMI required)
  • Current LTV on original price: 455/500 = 91% — still paying PMI, well above auto-cancel
  • Current LTV on appreciated value: 455/531 = 85.7% — still too high for the 75% reappraisal threshold

Project forward 2 more years (loan age then = 4 yrs):

  • Scheduled balance ~$435k, home value ~$564k
  • LTV on appreciated value: 435/564 = 77.1% — clears the 75% threshold for 2-5yr loans
  • You could pay for a $400 appraisal and request PMI cancellation

If your PMI is $275/mo, dropping it 4 years early vs waiting for auto-cancel saves $275 × 48 = $13,200.

This is the single highest-leverage thing most homeowners with PMI should do.

What if you don’t have appreciation?

The reappraisal path obviously requires actual appreciation. If your home is flat or slightly down:

  • The 80% scheduled-balance request still works (path 2) — just later than the appreciation path
  • Extra payments accelerate path 2, but not path 1
  • Refinancing to conventional with ≥20% equity is the alternative (drops PMI immediately)

FHA borrowers — read this carefully

FHA loans have different rules. The HPA does NOT apply to most FHA loans. Specifically:

  • FHA <10% down originated after June 3, 2013: MIP is for the LIFE of the loan. The only escape is refinancing to conventional once you have ≥20% equity.
  • FHA ≥10% down originated after June 3, 2013: MIP cancels automatically after 11 years.
  • FHA originated before June 3, 2013: HPA-equivalent rules apply (78% LTV trigger).

The PMI Removal calculator handles all four cases — pick your loan type from the dropdown.

If you have life-of-loan FHA MIP and have built up 20% equity, refinancing to conventional is the only path. This often pencils even when rates are similar to what you have, just because of the MIP savings.

VA and USDA loans

  • VA: no monthly mortgage insurance — just the one-time funding fee at closing. Nothing to cancel.
  • USDA: 0.35%/yr annual guarantee fee for the life of the loan. No cancellation. Refinancing to conventional with ≥20% equity is the only escape.

The reappraisal process step-by-step

  1. Confirm eligibility: at least 2 years into the loan, current on payments (no 30-day late in 12 mo / 60-day in 24 mo).
  2. Submit a written request to your servicer. Look for a “PMI Cancellation Request” form on their website, or call and ask where to send it.
  3. Servicer orders an appraisal (BPO — Broker Price Opinion — in some cases, full appraisal in others). You pay $150-600 for this.
  4. Servicer reviews. If LTV ≥ threshold, request denied (you can try again later). If LTV < threshold, PMI drops on a specified date (usually next billing cycle).
  5. Verify on the next mortgage statement that PMI is no longer being charged. If it is, escalate.

Total elapsed time: typically 30-60 days.

Common mistakes

  • Assuming auto-cancel happens at 80% LTV. It’s 78%, not 80%, and it’s based on the scheduled (not actual) balance.
  • Making extra payments to accelerate auto-cancel. They don’t — only the borrower-requested 80% path benefits from extra payments.
  • Not requesting cancellation when eligible. Lenders won’t proactively offer the 80%-scheduled or appreciation paths. You have to ask.
  • Skipping the reappraisal path because the appraisal costs money. $400 once vs $275/mo for years to come is a no-brainer if you have any appreciation.
  • Ordering your own appraisal. The servicer must order it — they won’t accept your own appraiser’s report.
  • Asking your “loan officer” from origination. They don’t handle servicing. Call your current servicer (the company you mail payments to).

What if the appraisal comes in too low?

If you pay for the appraisal and it doesn’t qualify you (LTV above threshold), the request is denied and PMI continues. You’ve spent $400 on nothing.

To minimize this risk:

  • Use the PMI Removal calculator with conservative appreciation assumptions to estimate your current LTV
  • Look at recent comps in your neighborhood (Redfin, Zillow recent sales). If your home would clearly appraise above the threshold, the risk is low. If it’s borderline, wait another 6-12 months.
  • Some servicers accept BPOs at lower cost ($150-200) instead of full appraisals; ask which they require.