How to Remove PMI: When It Cancels Automatically and How to Request It Early

PMI (private mortgage insurance) cancels automatically when your loan balance reaches 78% of the original purchase price — but you can request removal at 80% LTV, years earlier. With home appreciation, a $500 appraisal can eliminate PMI immediately. On a $280,000 loan paying $210/month in PMI, removing it 5 years early saves $12,600. Here are all four paths, the exact process, and when each one applies.

The four paths to PMI removal

1. Automatic cancellation at 78% LTV: required by law under the Homeowners Protection Act when your loan balance drops to 78% of the original purchase price — no action required
2. Written request at 80% LTV: once you reach 80% of original purchase price through payments, submit a written cancellation request; lender must respond within 30 days
3. Appraisal-based early removal: if your home has appreciated, an appraisal showing current LTV below 80% triggers PMI removal — typically costs $400–$700 but saves far more
4. Refinance: refinancing creates a new loan at lower LTV, eliminating PMI entirely — only worthwhile if rates have fallen or equity has grown substantially

Path 1 — Automatic cancellation at 78% LTV (all conventional loans)

The Homeowners Protection Act (HPA) requires servicers to automatically cancel PMI when the loan balance drops to 78% of the original purchase price based on the original amortisation schedule. You do not need to request this; the lender must act. On a 30-year loan originated at 90% LTV, automatic cancellation typically occurs around year 11 without any extra payments.

Key limitation: this uses the original purchase price, not the current appraised value. If your home has appreciated significantly, you may be paying PMI on a loan that is already well below 80% of current market value — a situation that calls for Path 3.

Path 2 — Written request at 80% LTV

Once your loan balance reaches 80% of the original purchase price, you can request early cancellation in writing. The servicer has 30 days to respond. Requirements vary by lender but typically include:

• No 30-day late payments in the past 12 months
• No 60-day late payments in the past 24 months
• No subordinate liens on the property
• Potentially a new appraisal to confirm value has not declined

Making extra principal payments accelerates this path. Adding $200/month to a $280,000 loan at 7% moves the 80% LTV point from year 9 to approximately year 6 — saving roughly 3 years of PMI at $210/month = $7,560.

Path 3 — New appraisal based on current value (fastest path for appreciation)

If your home has appreciated, current LTV may already be below 80% even though the original-purchase-price-based balance is higher. Most servicers allow removal based on current appraised value after 2–5 years of ownership (requirements vary by lender).

A professional appraisal costs $400–$700. If it confirms a current LTV below 80%, you submit the request with the appraisal report. The servicer typically processes removal within 30 days. On a $200/month PMI charge, the appraisal pays back in 3 months.

Path 4 — Refinance (the only option for FHA borrowers)

FHA MIP (mortgage insurance premium) does not automatically cancel on loans originated after June 2013 with less than 10% down — it is permanent for the life of the loan. The only exit is refinancing into a conventional loan once you have at least 20% equity.

This path also makes sense for conventional borrowers when refinancing offers a rate reduction that more than offsets the closing costs, and PMI removal is an additional benefit. Run the refinance break-even calculation before committing: if closing costs are $7,000 and the new payment (no PMI, potentially lower rate) saves $350/month, break-even is 20 months.

How to request PMI removal: step-by-step

1. Confirm your loan balance and original LTV. Log in to your servicer portal or call to get the current balance and the original appraised value used at origination.
2. Calculate your current LTV. Current balance ÷ original purchase price. If this is at or below 80%, proceed to the written request. If above 80%, calculate based on current appraised value (if home has appreciated).
3. Order an appraisal if needed. Use a lender-approved appraiser — many servicers will not accept an appraisal you ordered independently. Call the servicer first and ask for their approved appraiser list.
4. Submit a written request. Many servicers have an online form; others require a letter. Include the appraisal report if applicable.
5. Follow up at 30 days. The HPA requires the servicer to respond within 30 business days. If you receive no response, escalate to the Consumer Financial Protection Bureau (CFPB).

How much does PMI actually cost?

PMI rates typically range from 0.5% to 1.5% of the loan amount annually. Higher-LTV loans (95%) and lower credit scores (below 700) push toward the higher end. FHA MIP is 0.55–0.85% annually depending on loan term and LTV — competitive with conventional PMI but permanent without refinancing.

Key takeaways

• Automatic PMI cancellation at 78% LTV is guaranteed by law — but it uses the original purchase price, not current value, and follows the original amortisation schedule, ignoring any extra payments you have made.
• You can request early cancellation at 80% LTV using the original purchase price as the reference — extra principal payments directly accelerate this.
• Home appreciation is the fastest trigger: a $500 appraisal revealing current LTV below 80% can eliminate PMI years ahead of schedule.
• FHA borrowers cannot remove MIP without refinancing — if you have 20%+ equity, the refinance math often works strongly in your favor.

To model the payoff impact of extra principal payments on your PMI cancellation date: use the Mortgage Payoff Accelerator to see exactly when your balance hits 80% LTV, and the Refinance Break-Even Clock to evaluate whether refinancing to eliminate FHA MIP makes sense at current rates. For related reading, see how to calculate home affordability and how much down payment you actually need.