How to get rid of PMI: five legitimate ways to drop private mortgage insurance

If you bought a home with less than 20% down on a conventional loan, you are almost certainly paying private mortgage insurance (PMI). It is an extra line on your monthly bill — often $30 to $70 per $100,000 borrowed — and it buys you nothing. PMI exists to protect the lender if you default. The good news is that PMI is temporary, and once you understand the numbers, getting rid of it is one of the easiest ways to cut your housing cost without refinancing or moving.

What is PMI and why do lenders require it?

When you put down less than 20% of a home's price, you are borrowing more than 80% of its value. From the lender's point of view, a smaller down payment means a higher chance of loss if you stop paying and they have to foreclose and sell. Private mortgage insurance is the lender's hedge against that risk: an insurance policy you pay for, but that pays the lender.

The key number is your loan-to-value ratio (LTV) — your loan balance divided by the home's value. Put 10% down and your LTV starts at 90%. PMI typically stays in place until that ratio falls to 80% (you reach 20% equity) or lower. Premiums usually run between 0.3% and 1.5% of the original loan amount per year, billed monthly, with the rate driven by your credit score and down payment.

The LTV milestones that decide when PMI ends

Federal law — the Homeowners Protection Act of 1998 — sets the rules for borrower-paid PMI on most conventional loans on a primary residence. Three loan-to-value milestones matter:

LTV milestone	Equity	What happens
80% LTV	20% equity	You may request cancellation in writing once the balance reaches (or is scheduled to reach) 80% of the original value.
78% LTV	22% equity	The servicer must automatically terminate PMI once the balance reaches 78% of the original value, if you are current.
Midpoint of loan	varies	If you are current but somehow have not hit 78%, PMI must end at the loan's midpoint (e.g. year 15 of a 30-year loan).

Federal rules for borrower-paid PMI on conventional loans. "Original value" generally means the lesser of the purchase price or the appraised value at closing. Lender-paid PMI, investment properties and jumbo loans can follow different terms — confirm with your servicer.

The five ways to get rid of PMI

1. Wait for automatic termination at 78% LTV

The simplest path requires nothing from you. As long as you are current on payments, your servicer is legally required to cancel PMI on the date your balance is scheduled to reach 78% of the home's original value based on the original amortization schedule. This is the default backstop — but it is also the slowest, because it ignores any extra payments or appreciation and waits for the regular schedule to grind the balance down.

2. Request cancellation at 80% LTV

You do not have to wait for 78%. Once your balance hits 80% of the original value, you can send your servicer a written request to cancel PMI. To qualify you generally need to be current, have a clean recent payment history, and certify there are no second liens such as a home-equity line. The servicer may also require evidence — often a broker price opinion or appraisal — that the home has not dropped in value. Reaching 80% manually, then asking, can shave months off the automatic 78% date.

3. Get a new appraisal after appreciation or renovation

The federal milestones use original value, but your real equity tracks current value. If your local market has risen or you have renovated, your home may already be worth far more than you paid — meaning your current LTV is below 80% even though your loan balance has barely moved. Most conventional lenders let you cancel PMI based on a new appraisal showing current LTV at 80% or lower. One catch: if the loan is only two to five years old, lenders typically require you to be at 75% LTV on the new value rather than 80%. You pay for the appraisal (often $400–$600), but it can end PMI years early.

4. Pay down principal faster to reach 20% equity

Extra payments that go straight to principal pull your balance below the 80% and 78% thresholds sooner. Even modest additional payments compound: an extra $150 a month, or one lump sum from a bonus or tax refund, can move up your cancellation date by a year or more. A targeted lump sum to cross exactly to 80% — then a written cancellation request — is often the fastest, cheapest route. Our guide on how to pay off your mortgage faster breaks down where extra payments do the most work.

5. Refinance into a new loan

If you now have 20% equity — through appreciation, principal paydown, or both — refinancing into a fresh conventional loan can drop PMI entirely, since the new loan starts below 80% LTV. Refinancing also makes sense as the main escape hatch for FHA borrowers (more on that below). The trade-off is closing costs and a reset term, so it only pays off when rates are comparable or lower and you will stay long enough to recoup the costs. Run it through our refinance calculator before committing.

A worked example: how much PMI actually costs you

Numbers make the urgency clear. Say you buy a $400,000 home with 10% down ($40,000), borrowing $360,000 at a 0.5% annual PMI rate. That is $1,800 a year, or $150 a month, until you reach 20% equity.

Path to remove PMI	Roughly when	PMI paid before it ends
Automatic termination (78% LTV)	~Year 11 (regular payments)	~$19,800
Request cancellation (80% LTV)	~Year 9	~$16,200
New appraisal after 4% / yr growth	~Year 3	~$5,400
Extra $300/mo principal, then request	~Year 5	~$9,000

Illustrative figures only, assuming a 30-year fixed loan around 6.5% and steady appreciation. Your actual timeline depends on your rate, payment behavior, local market and servicer rules. Use a calculator for your own numbers.

The same $150 monthly premium can cost you anywhere from roughly $5,400 to nearly $20,000 depending on which lever you pull. That spread is why it is worth tracking your LTV instead of waiting passively for automatic termination.

FHA loans are different: MIP can last the life of the loan

An important warning for FHA borrowers: FHA loans do not carry private PMI. They carry a government mortgage insurance premium (MIP), and the rules are far less forgiving. On most FHA loans originated with less than 10% down, MIP lasts for the entire life of the loan — it does not fall off at 78% or 80% equity the way conventional PMI does. (If you put down 10% or more on an FHA loan, MIP currently drops after 11 years.)

Because reaching 20% equity will not cancel FHA MIP by itself, the standard way to escape it is to refinance into a conventional loan once you have at least 20% equity and qualify. That swaps lifetime MIP for cancellable conventional PMI — or no mortgage insurance at all. Before assuming PMI rules apply, check whether your loan is conventional or FHA; it changes your entire strategy.

Practical checklist before you ask

• Confirm your loan type — conventional PMI cancels at 80%/78%; FHA MIP usually does not.
• Be current and clean — recent late payments can block a cancellation request.
• Know your "value" — original value for the automatic milestones, current value if you are using an appraisal.
• Put it in writing — servicers require a written request to cancel at 80%; a phone call is not enough.
• Watch second liens — a HELOC or second mortgage can disqualify you until it is addressed.

Frequently asked questions