own-a-home

PMI Cancellation — Eliminate Private Mortgage Insurance Early

Difficulty Easy Risk None Applies To All Potential Savings $2,000 - $6,000 per year Last Verified 2026-03-13

PMI Cancellation — Eliminate Private Mortgage Insurance Early

What Is It?

Private Mortgage Insurance (PMI) is a monthly fee added to your mortgage payment when you put less than 20% down on a conventional home purchase. It protects the lender — not you — against default. Under the Homeowners Protection Act, your lender is legally required to cancel PMI automatically when your loan balance reaches 78% of the original purchase price. But you can request cancellation earlier — at 80% LTV — and potentially eliminate PMI years ahead of schedule, especially if your home has appreciated.

How It Works

There are two paths to early PMI cancellation:

Path 1 — Request based on payment schedule (80% LTV)

When your loan balance drops to 80% of the original purchase price through regular payments, submit a written cancellation request to your lender or servicer. You do not have to wait for the automatic 78% threshold.

Requirements:

  • Good payment history (no payments 30+ days late in the past 12 months; no payments 60+ days late in the past 24 months)
  • No subordinate liens (e.g., a HELOC) on the property
  • Written cancellation request submitted to your servicer

Path 2 — Request based on appreciation (value has increased)

If your home’s market value has increased since purchase, you may be able to reach 80% LTV based on current value — meaning you could cancel PMI much earlier.

  1. Contact your servicer to ask about their appraisal-based cancellation process
  2. Order an appraisal (typically $300–$500) through your servicer’s approved appraiser list
  3. If the appraisal confirms your LTV is at or below 80%, request cancellation in writing

Many servicers require you to have made payments for at least 2 years before allowing appraisal-based cancellation, and some require 12 months of payments.

What Most People Don’t Know

  • Lenders do not remind you. Your servicer has zero financial incentive to tell you when you’re eligible — they collect PMI payments and pass them to the insurer. You must initiate the process.
  • Automatic cancellation uses the original price, not current value. If you bought at $300,000 and your home is now worth $450,000, the automatic cancellation still triggers based on the original $300,000 — making the appraisal path far more powerful.
  • FHA loans are different. FHA mortgage insurance (MIP) cannot be cancelled the same way. If you have an FHA loan, the typical path to eliminating MIP is refinancing into a conventional loan once you have sufficient equity.
  • Extra payments accelerate eligibility. Making extra principal payments speeds up when you cross the 80% threshold.

Who Benefits Most?

Anyone with a conventional mortgage with PMI — especially those in markets where home values have risen significantly since purchase.

  • Homeowners Protection Act of 1998 — 12 U.S.C. Chapter 49 (§§ 4901–4910). Requires automatic PMI termination at 78% LTV and establishes the right to request cancellation at 80% LTV.
  • Regulation Z (12 CFR Part 1026) — CFPB implementing regulation for mortgage disclosures, including PMI disclosure requirements.

Frequently Asked Questions

Will my lender automatically cancel my PMI when I hit 80% LTV, or do I have to ask?

You have to ask at 80% LTV — lenders have no legal obligation to cancel PMI until your loan reaches 78% of the original purchase price, and that automatic cancellation happens on the scheduled date only (not based on appreciation). To cancel at 80%, you must submit a written request. Your servicer will not proactively notify you that you’re eligible.

My home has appreciated significantly since I bought it — can I use the higher current value to cancel PMI early?

Yes, this is the most powerful path to early cancellation. Contact your servicer about their appraisal-based cancellation process, order an appraiser from their approved list (typically $300–$500), and if the appraisal confirms your LTV is at or below 80% based on current value, submit a written cancellation request. Many servicers require at least 2 years of payment history before allowing this route.

What payment history do I need to qualify for PMI cancellation?

Under the Homeowners Protection Act, you must have no payments 30 or more days late in the past 12 months, and no payments 60 or more days late in the past 24 months. You also cannot have any subordinate liens (like a HELOC) on the property. If your payment history has gaps, you may need to wait until the record is clean.

Does the PMI cancellation process work the same way for FHA loans?

No. FHA mortgage insurance (MIP) cannot be cancelled under the Homeowners Protection Act — that law only covers conventional loans. If you have an FHA loan, the typical path to eliminating MIP is refinancing into a conventional loan once you’ve built sufficient equity (typically 20%).

If my lender denies my PMI cancellation request, what recourse do I have?

The lender must provide a written denial explaining the reason — for example, a failed appraisal or payment history issue. You can order a second appraisal through a different appraiser, resolve the cited issue and reapply, or file a complaint with the CFPB at consumerfinance.gov if you believe the denial was improper.

Sources