How to Remove PMI: Mortgage Insurance Cancellation
Many homeowners can request cancellation of conventional private mortgage insurance (PMI) under defined conditions, but the process is not automatic at every equity level.
What PMI protects—and what it does not
PMI is typically required on certain conventional mortgages with smaller down payments. It protects the lender against losses if the borrower defaults; it is not insurance that pays the borrower's mortgage after a job loss. The CFPB explains that PMI is generally distinct from FHA mortgage insurance and VA loan rules.
The 80% cancellation request
For many covered principal-residence mortgages, the Homeowners Protection Act gives borrowers the right to request PMI cancellation when the principal balance is scheduled to reach 80% of the home's original value, or earlier when actual principal payments reach that point. Requirements can include a written request, good payment history, being current, certification of no junior liens and evidence the property has not declined in value.
The 78% automatic termination rule
The CFPB explains that, for covered loans, PMI generally must terminate automatically when the principal balance is scheduled to reach 78% of the original value if the borrower is current. If payments are not current, termination can be delayed until the account is brought current. The original value and scheduled balance matter; an online estimate of current market value is not the same test.
What about a rising home value?
Some servicers and investors have separate early-cancellation policies based on current value, payment history, seasoning and other conditions. Do not assume a new appraisal automatically removes PMI. Ask the servicer for its written policy, required documentation and any valuation costs before paying for an appraisal.
FHA insurance is different
FHA mortgage insurance has its own upfront and ongoing premium rules. Conventional PMI cancellation law does not automatically apply to FHA-insured mortgages. A refinance into a different eligible loan may be worth evaluating, but it adds costs and new underwriting requirements. Compare the total cost rather than assuming PMI removal alone justifies refinancing.
A simple action plan
Locate your mortgage statement and original PMI disclosure. Confirm loan type, original value, current balance, payment history and any second liens. Ask the servicer in writing for the earliest cancellation date and the specific steps. Keep records of communications and follow up if the policy or legal timeline appears inconsistent.
Frequently asked questions
Can PMI end before my loan reaches 78%?
Yes, some covered borrowers may request cancellation at 80%, subject to requirements.
Does home appreciation automatically cancel PMI?
No. Servicer and investor policies may require a valuation and other conditions.
Is FHA mortgage insurance the same as PMI?
No. FHA insurance follows separate rules.
Do I need to refinance to remove conventional PMI?
Not always. Ask your servicer about cancellation on the existing loan first.
Can a second mortgage affect PMI cancellation?
Yes. Junior liens may affect eligibility under applicable cancellation rules.
The bottom line
Many homeowners can request cancellation of conventional private mortgage insurance (PMI) under defined conditions, but the process is not automatic at every equity level. Compare written options and confirm current program requirements before committing.
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