Private mortgage insurance (PMI) adds to your monthly mortgage payment, but it doesn’t have to last forever. Most homeowners can remove PMI once their mortgage balance reaches 80% of their home’s original value, and lenders must automatically cancel it at 78% loan-to-value (LTV) if the loan is current.
In some situations, homeowners may be able to remove PMI even sooner—especially if they’ve built equity faster through home price appreciation, extra mortgage payments, or refinancing into a new loan.
Understanding when PMI can be removed and how the process works can help you lower your monthly payment and reduce the total cost of your mortgage.
How to request PMI removal from your mortgage
Private mortgage insurance isn’t permanent. Once you build enough equity in your home, you may be able to remove PMI and reduce your monthly mortgage payment.
For most conventional loans, PMI can be eliminated once your loan-to-value (LTV) ratio reaches certain thresholds, though the exact process depends on your loan terms and your lender’s requirements.
Homeowners typically get rid of PMI in one of the following ways.
1. Request PMI cancellation at 80% loan-to-value (LTV)
You can formally ask your mortgage servicer to remove PMI once your loan balance reaches 80% of the home’s original value, assuming you meet payment history and eligibility requirements.
Most lenders require:
- A good payment history
- The loan to be current
- No recent late payments (typically within the last 12 months)
- No additional liens, such as a second mortgage or HELOC
- Proof that the property value has not declined
Submitting a written request to your servicer usually starts the PMI cancellation process.
2. Automatic PMI termination at 78% LTV
If you don’t request PMI removal earlier, federal law requires lenders to automatically cancel PMI once your balance reaches 78% of the home’s original value, based on the loan’s amortization schedule, as long as your loan is current.
This rule comes from the Homeowners Protection Act (HPA) and applies to most conventional mortgages.
3. Early PMI removal using a new appraisal
If your home’s value has increased significantly since you purchased it, some lenders allow early PMI removal based on a new appraisal.
An updated appraisal may show that your current loan balance represents less than 80% of the home’s value, which could make you eligible to cancel PMI sooner than the original loan schedule.
4. Making extra principal payments
Paying additional amounts toward your loan principal can reduce your mortgage balance faster. Reaching the 80% LTV threshold sooner may allow you to request PMI removal earlier than scheduled.
Even small extra payments applied consistently can shorten the timeline for reaching the required equity level.
5. Refinancing your mortgage
If your home has gained value or your loan balance has dropped enough, refinancing into a new mortgage with an LTV of 80% or less can eliminate PMI entirely.
Refinancing replaces your existing loan with a new one and may also provide opportunities to secure a lower interest rate, adjust your loan term, or reduce your monthly payment.
However, refinancing typically involves closing costs, so it’s important to weigh the potential savings before choosing this option.
What PMI is and why lenders require it
Private mortgage insurance protects the lender, not the borrower, if the borrower stops making mortgage payments. PMI is typically required on conventional loans with less than 20% down.
Common PMI characteristics:
- Usually paid monthly
- Added to your mortgage payment
- Does not reduce your loan balance
- Can typically be removed once you build enough equity
PMI costs usually range from 0.3% to 1.5% of the loan amount per year, depending on credit score, loan size, and down payment. Over several years, PMI can add thousands of dollars to the cost of homeownership.
The downsides of PMI and how it affects your mortgage
Private mortgage insurance affects both your monthly payment and how quickly you build usable equity in your home. While PMI can make homeownership possible with a smaller down payment, it also increases your housing costs until it’s removed.
At a high level:
- PMI raises your monthly mortgage payment
- It does not reduce your loan balance
- It increases the overall cost of homeownership until it’s removed
Monthly payment impact: with PMI vs. without PMI
The example below shows how PMI can affect a monthly mortgage payment.
| Scenario | Monthly principal & interest | Monthly PMI | Total monthly payment |
| With PMI | $2,150 | $180 | $2,330 |
| Without PMI | $2,150 | $0 | $2,150 |
Even modest PMI premiums can add up to thousands of dollars over time, which is why many homeowners look for opportunities to remove it as soon as they’re eligible.
How to calculate your LTV and equity for PMI removal
Before requesting PMI removal, you’ll need to confirm whether you’ve reached the required loan-to-value (LTV) threshold. LTV compares how much you still owe on your mortgage to the value of your home and is the primary metric lenders use to determine PMI eligibility.
The LTV formula:
Loan-to-value (LTV) = Current loan balance ÷ Home value × 100
Depending on your lender’s rules, LTV may be calculated using either your home’s original purchase price or a current appraised value.
Worked example: calculating LTV
- Original home value: $400,000
- Current loan balance: $320,000
LTV = $320,000 ÷ $400,000 × 100 = 80%
In this scenario, the borrower has reached the 80% LTV threshold, meaning they may be eligible to request PMI cancellation—assuming other requirements are met.
When it may make sense to keep PMI temporarily
There are situations where paying PMI a bit longer may be reasonable—or even preferable.
PMI may be worth keeping if:
- You plan to sell or refinance in the near future
- Your PMI premium is very low
- Removal costs exceed near-term savings
- Cash is better used for higher-interest debt
- You’re prioritizing emergency savings or other goals
In some cases, paying PMI a bit longer may be simpler or less expensive than paying for an appraisal or refinancing.
In these cases, waiting for automatic PMI termination can be a low-effort alternative.
When PMI can’t be removed
In some situations, PMI cannot be removed right away—or may last longer than expected—depending on your loan type and eligibility.
- FHA loans: PMI removal rules apply to conventional loans. FHA loans use mortgage insurance premiums (MIP), which often last for the life of the loan unless you refinance into a conventional mortgage.
- USDA loans: USDA loans use a guarantee fee structure that typically remains for the life of the loan unless the mortgage is refinanced into a conventional loan.
- Insufficient equity: Most lenders require your loan balance to reach 80% loan-to-value (LTV) before approving PMI cancellation. If your balance is still above that threshold, you’ll need to continue building equity.
- Payment history issues: Lenders typically require a strong payment record. Recent late payments or a loan that isn’t current may delay PMI removal.
- Second mortgages or liens: If your property has a second mortgage, HELOC, or other lien, lenders may deny PMI cancellation until the additional debt is resolved.
- Appraisal or loan requirements: Some lenders require a new appraisal or a minimum loan age before approving early PMI removal.
If your lender denies a request to remove PMI, they should be able to explain which requirement must be met before you can try again.
