How to Get Rid of PMI: 5 Ways to Remove Private Mortgage Insurance

If you put less than 20% down on your home, you’re probably paying private mortgage insurance (PMI)—and you’re not alone. According to the National Association of Realtors, the typical first-time buyer puts down just 9%, meaning most new homeowners start out with PMI tacked onto their monthly payments.

The good news: PMI doesn’t last forever. Federal law requires your lender to cancel it once you hit certain equity milestones, and you can often get rid of it even sooner by taking action. Removing PMI typically saves homeowners $100-$300 per month—money that goes straight back in your pocket.

Key Takeaways

• You can request PMI cancellation when your loan balance reaches 80% of your home’s original value—your lender must remove it at 78% automatically.
• PMI costs typically range from 0.5%-1.5% of your loan amount annually, or $100-$300+ per month on a $300,000 mortgage.
• Home appreciation can help you reach 20% equity faster, but you may need to pay for a new appraisal ($300-$600) to prove it.
• FHA loans have different rules—mortgage insurance premium (MIP) lasts 11 years or the life of the loan, and refinancing is often the only way to remove it.
• Making extra principal payments accelerates your path to 80% LTV and PMI cancellation.

Table of Contents

• Key Takeaways
• What Is PMI and Why Do You Have It?
• How Much Does PMI Cost?
• 5 Ways to Get Rid of PMI
• Method 1: Request Cancellation at 80% LTV
• Method 2: Wait for Automatic Termination at 78%
• Method 3: Use Home Appreciation
• Method 4: Make Extra Principal Payments
• Method 5: Refinance Your Mortgage
• What About FHA Mortgage Insurance?
• How to Request PMI Cancellation: Step by Step
• Frequently Asked Questions

What Is PMI and Why Do You Have It?

Private mortgage insurance protects your lender—not you—if you stop making payments and default on your loan. Lenders require it when you borrow more than 80% of your home’s value because loans with smaller down payments are statistically riskier.

Here’s the key distinction: PMI provides zero benefit to you as a homeowner. It doesn’t help you build equity, reduce your loan balance, or protect you in any way. It’s purely a cost imposed because you borrowed a higher percentage of your home’s value.

That’s why eliminating PMI as soon as possible makes financial sense. Every month you pay PMI is a month you’re paying for insurance that only protects your lender.

PMI applies specifically to conventional loans (loans not backed by a government agency). If you have an FHA loan, you pay a similar but different fee called mortgage insurance premium (MIP), which has different rules for removal.

How Much Does PMI Cost?

PMI typically costs between 0.5% and 1.5% of your original loan amount per year, depending on your credit score, down payment, and loan type. The lower your credit score and down payment, the higher your PMI rate.

Here’s what PMI might cost on a $300,000 loan:

• At 0.5% annually: $1,500/year or $125/month
• At 1.0% annually: $3,000/year or $250/month
• At 1.5% annually: $4,500/year or $375/month

Over several years, these costs add up significantly. If you pay $200/month in PMI for five years, that’s $12,000—money that could have gone toward paying down your principal, investing, or other financial goals.

Starting in 2026, there’s good news: PMI premiums are now tax-deductible as mortgage interest (subject to income limits). This doesn’t eliminate the cost, but it does reduce the effective expense for homeowners who itemize deductions.

5 Ways to Get Rid of PMI

The Homeowners Protection Act of 1998 (also called the PMI Cancellation Act) establishes your rights to cancel PMI. Here are five methods to eliminate this monthly expense:

Method 1: Request Cancellation at 80% LTV

You have the legal right to request PMI cancellation once your loan balance reaches 80% of your home’s original value. “Original value” means the lower of your purchase price or the appraised value when you bought (or refinanced) the home.

Requirements to request cancellation:

• Your loan balance must be at or below 80% of original value
• You must be current on your mortgage payments
• You must have a good payment history (no 60+ day late payments in the past two years, no 30+ day late payments in the past year)
• You must submit a written request to your loan servicer
• You may need to certify that there are no subordinate liens (like a home equity loan)
• Your lender may require proof that your home’s value hasn’t declined

The date when you’re scheduled to reach 80% LTV should appear on your PMI disclosure form, which you received at closing. If you can’t find it, contact your loan servicer or check your amortization schedule.

Key point: You don’t have to wait for the scheduled 80% date. If you’ve made extra payments and reached 80% ahead of schedule, you can request cancellation immediately.

Method 2: Wait for Automatic Termination at 78%

If you don’t request cancellation at 80%, your lender is required by federal law to automatically terminate PMI when your loan balance reaches 78% of the original value, based on your original amortization schedule.

This happens without you taking any action—your servicer should simply stop charging PMI. However, you must be current on your payments for automatic termination to occur. If you’re behind, PMI continues until you catch up.

There’s also a “final termination” rule: PMI must be canceled no later than the midpoint of your loan term (15 years into a 30-year mortgage), even if you haven’t reached 78% equity. This protects borrowers with interest-only periods or other non-standard loan structures.

Why wait for 78% when you can request at 80%? You shouldn’t—that extra 2% represents unnecessary PMI payments. The 78% automatic termination is a backstop, not a goal. Always request cancellation as soon as you hit 80%.

Method 3: Use Home Appreciation

Here’s where things get interesting. If your home has increased in value, you might have 20% equity even if you haven’t paid down much principal.

For example, if you bought a home for $300,000 with 10% down ($30,000), you started with a $270,000 mortgage. If your home is now worth $340,000, your equity is $70,000 ($340,000 – $270,000), which equals about 20.6% equity. You could potentially cancel PMI based on the new value.

However, canceling PMI based on appreciation typically requires a new appraisal to prove the higher value. You’ll need to:

• Contact your servicer to request PMI cancellation based on current value
• Pay for an appraisal (typically $300-$600)
• Meet any servicer-specific requirements (some require 2+ years of payment history)

Different loan servicers have different policies for appreciation-based cancellation. Some follow Fannie Mae and Freddie Mac guidelines:

• If your loan is 2-5 years old: You need 25% equity to cancel PMI based on current value
• If your loan is 5+ years old: You need 20% equity to cancel PMI based on current value

Even with an appraisal cost of $400-$500, this can be worthwhile if it eliminates years of PMI payments.

Method 4: Make Extra Principal Payments

Making extra payments toward your mortgage principal accelerates your path to 80% LTV and PMI cancellation. Every dollar you pay beyond your required payment goes directly toward reducing your loan balance.

Strategies for extra payments include:

• Round up your payment: If your payment is $1,847, round up to $1,900 or $2,000
• Make biweekly payments: Pay half your monthly payment every two weeks, resulting in 13 full payments per year instead of 12
• Apply windfalls: Put bonuses, tax refunds, or other lump sums toward principal
• Add a fixed extra amount: Commit to paying an extra $100, $200, or $500 monthly

When making extra payments, specify that the additional amount should be applied to principal, not held in escrow or applied to future payments. Most servicers have a specific process for designating principal-only payments.

Once your extra payments bring your balance to 80% of original value, request PMI cancellation immediately—don’t wait for your servicer to notice.

Method 5: Refinance Your Mortgage

Refinancing replaces your current mortgage with a new one. If you have at least 20% equity at the time of refinancing, your new loan won’t require PMI.

Refinancing to eliminate PMI makes sense when:

• You can get a lower interest rate that justifies closing costs
• You have an FHA loan with permanent mortgage insurance
• Home appreciation has given you 20%+ equity
• You want to change your loan term anyway

Refinancing to eliminate PMI does NOT make sense when:

• You locked in a favorable interest rate you don’t want to lose
• Closing costs ($4,000-$12,000+) outweigh the PMI savings
• You’re close to automatic PMI termination anyway
• You plan to sell the home soon

Always calculate the break-even point: how many months of PMI savings does it take to recoup the refinancing costs? If you’re selling in two years but break-even is three years, refinancing doesn’t make financial sense.

What About FHA Mortgage Insurance?

FHA loans have mortgage insurance premium (MIP), which works differently from conventional loan PMI. The rules depend on when you got your loan and how much you put down:

For FHA loans closed on or after June 3, 2013:

• If you put down 10% or more: MIP is required for 11 years
• If you put down less than 10%: MIP is required for the entire life of the loan

Unlike conventional PMI, FHA MIP cannot be canceled simply by reaching 20% equity. For most FHA borrowers, the only way to eliminate MIP is to refinance into a conventional loan.

If your home has appreciated and you now have 20%+ equity, refinancing from FHA to conventional can eliminate the permanent mortgage insurance while potentially lowering your rate. However, you’ll need to qualify for the new loan based on current credit, income, and underwriting standards.

How to Request PMI Cancellation: Step by Step

Frequently Asked Questions