If you bought your home with less than 20% down on a conventional loan, you’re probably paying private mortgage insurance, or PMI. It protects the lender — not you — if you stop making payments, and it can add anywhere from roughly $30 to $150 or more per month for every $100,000 you borrowed. The good news is that PMI is not permanent. Once you’ve built enough equity, you can get rid of it, and doing so can meaningfully lower your monthly payment.
Here’s how PMI removal actually works, the difference between requesting it early and waiting for it to drop off automatically, and the steps to take when you’re ready.
What PMI is and why you have it
Private mortgage insurance is required on most conventional loans when your down payment is under 20% of the home’s value. Lenders see smaller down payments as higher risk, so they require insurance that pays them back if the loan defaults. You pay the premium, usually rolled into your monthly mortgage payment.
PMI is specific to conventional loans. FHA loans have their own mortgage insurance (called MIP) that follows different — and stricter — rules, and on many FHA loans it can’t be removed at all without refinancing. If you’re not sure which type of insurance you’re paying, check your loan documents or ask your servicer.
The two ways PMI comes off
Automatic termination
Under the federal Homeowners Protection Act, your servicer must automatically cancel PMI once your loan balance is scheduled to reach 78% of the home’s original value — meaning you’ve paid down 22% based on your original amortization schedule. This happens on its own; you don’t have to ask. You must be current on your payments for it to take effect.
Requesting cancellation early
You don’t have to wait for 78%. You have the right to request cancellation once your balance reaches 80% of the original value (20% equity). This is a written request to your servicer, and it’s worth doing because the difference between 80% and 78% can be several months of premiums.
There’s also a third path: if your home has appreciated in value, you may be able to cancel based on the current market value rather than the original purchase price. This usually requires paying for a new appraisal, but in a rising market it can let you drop PMI far sooner.
Steps to remove PMI early
- Check your current loan balance and compare it to your original home value. When the balance hits 80% of that value, you’re eligible to request cancellation.
- Confirm you meet your servicer’s conditions: a solid payment history with no recent late payments, and no second mortgage or home equity line that pushes your combined loan-to-value too high.
- Submit a written cancellation request to your servicer. Ask them exactly what they require — some want a specific form.
- Be prepared to pay for an appraisal or broker price opinion if you’re canceling based on appreciation, or if the servicer wants to confirm the home’s value hasn’t dropped.
- Once approved, verify on your next statement that the PMI line item is gone and your payment has dropped accordingly.
Ways to speed up equity
You can reach the 20% mark faster by making extra principal payments, putting a lump sum (like a tax refund or bonus) toward the balance, or benefiting from home price appreciation in your area. Even small extra principal payments each month add up and can shave months off your PMI timeline.
Refinancing is another route — if rates have dropped or your home has appreciated significantly, refinancing into a new loan below 80% loan-to-value eliminates PMI entirely. Just weigh the closing costs of a refinance against what you’d save.
A note on FHA loans
If you have an FHA loan, the rules are different. For most FHA loans originated after mid-2013 with less than 10% down, the mortgage insurance premium lasts for the life of the loan. The common way to get rid of it is to refinance into a conventional loan once you have 20% equity. This is one reason many buyers who used FHA financing to get in the door later refinance.
Frequently asked questions
Does PMI go away on its own?
Yes, on conventional loans. Your servicer is required to automatically cancel it once your loan balance reaches 78% of the home’s original value, as long as you’re current on payments. But you can request cancellation earlier at 80%.
How much can removing PMI save me?
It depends on your loan size and PMI rate, but it commonly ranges from $50 to $250+ per month. On a $300,000 loan, dropping PMI might save you well over $1,000 a year.
Can I remove PMI if my home value went up?
Often yes. If appreciation has pushed your equity past 20% of the current value, many servicers will cancel PMI based on a new appraisal. You typically pay for the appraisal, but it can eliminate PMI years early.
Why can’t I remove insurance from my FHA loan?
FHA mortgage insurance follows different rules than conventional PMI. On most modern FHA loans with a low down payment, the premium lasts the life of the loan, and refinancing into a conventional loan is the usual way to eliminate it.