How PMI Removal Works and When You Can Cancel
Private mortgage insurance (PMI) is required on conventional loans when you put down less than 20%. Under the Homeowners Protection Act, you have legal rights to cancel PMI once you reach certain loan-to-value (LTV) milestones. Knowing your exact cancellation date can save you thousands of dollars.
LTV = $295,000 ÷ $400,000 = 73.75% → Already below 80% — request PMI cancellation now!
PMI Cancellation LTV Thresholds
| LTV Threshold | Action | Who Initiates | Requirement |
|---|---|---|---|
| 80% LTV | Request cancellation | Borrower must request | Good payment history, written request |
| 78% LTV | Automatic cancellation | Lender must cancel | Based on original amortization schedule |
| Midpoint | Final termination | Lender must cancel | Halfway through loan term regardless of LTV |
Average PMI Cost by Down Payment
| Down Payment | LTV at Origination | Typical PMI Rate | On $300K Loan |
|---|---|---|---|
| 3% down | 97% LTV | 1.0%–1.5%/yr | $250–$375/mo |
| 5% down | 95% LTV | 0.8%–1.2%/yr | $200–$300/mo |
| 10% down | 90% LTV | 0.5%–0.8%/yr | $125–$200/mo |
| 15% down | 85% LTV | 0.3%–0.5%/yr | $75–$125/mo |
You can request PMI cancellation at 80% LTV. Your lender must automatically cancel at 78% LTV based on the original amortization schedule under the Homeowners Protection Act.
Make extra principal payments to reach 80% LTV faster, get a new appraisal if your home appreciated, or refinance into a new loan if you now have 20% equity.
80% LTV for a borrower-requested cancellation. 78% LTV for automatic cancellation. Some lenders require a new appraisal to confirm the home value hasn't declined.
PMI typically costs 0.5%–1.5% annually, or $50–$150 per month per $100,000 borrowed. On a $300,000 loan at 0.8% rate = about $200/month.
Yes. If your home appreciated significantly you may qualify based on current value. Most lenders require a formal appraisal and the loan to be at least 2 years old.
The HPA of 1998 gives borrowers the right to cancel PMI at 80% LTV and requires automatic cancellation at 78% LTV. Lenders must inform borrowers of cancellation rights at origination and annually.
For standard 78% LTV cancellation, no appraisal needed. For early cancellation based on appreciation, most lenders require a new appraisal ($300–$500).
Yes. If your new loan LTV is below 80% at origination, no PMI is required. This works well if your home has appreciated enough for 20% equity.
PMI is for conventional loans and can be cancelled. MIP is for FHA loans — for loans with less than 10% down after June 2013, MIP lasts the life of the loan and requires refinancing to remove.
Submit a written request to your loan servicer. You need good payment history (no 30+ day late payments in 12 months) and may need to certify no subordinate liens. Servicer has 30 days to respond.
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