Free and instant — plug in your own numbers.
Private mortgage insurance (PMI) is a policy that protects your lender, not you, if you stop paying a conventional mortgage. Lenders usually require it when you put down less than 20% of the home's price. You pay the premium, typically as part of your monthly payment, until the loan balance falls far enough.
There are four main ways to get rid of it: ask your servicer to cancel it once your balance reaches 80% of the home's original value, wait for it to end automatically at 78% under the US Homeowners Protection Act, pay the loan down faster so you reach 80% sooner, or use a higher current home value through a new appraisal or a refinance. In the example below, adding $200 a month and asking for cancellation ends PMI after 5 years and 5 months instead of 9 years and 6 months.
What PMI is and how it's charged
PMI applies to conventional loans, meaning loans not backed by a government agency, when the loan-to-value ratio (LTV) is above 80%. LTV is simply the loan balance as a share of the home's value:
The premium depends on your credit score, your down payment, the loan type and how much coverage the lender requires. Your Loan Estimate shows the monthly PMI cost, so compare it across lenders just as you compare rates.
PMI comes in a few forms:
- Borrower-paid monthly PMI: the most common. It appears as a line in your monthly payment and can be canceled under the rules below.
- Single-premium PMI: paid once, at closing or rolled into the loan. There's no monthly charge to remove.
- Lender-paid mortgage insurance: the lender pays the premium and charges you a higher interest rate instead. You can't cancel it; the higher rate stays until you refinance or pay off the loan.
PMI doesn't protect you. If you fall behind on payments, you can still lose the home.
The US rules: 80%, 78% and the midpoint
The Homeowners Protection Act sets three dates for borrower-paid PMI. It covers mortgages on single-family primary residences closed on or after July 29, 1999. The Consumer Financial Protection Bureau has a plain-English summary of the PMI rules.
| Rule | When it applies | What you need to do |
|---|---|---|
| Cancellation on request | Balance reaches 80% of original value, on schedule or earlier through extra payments | Ask in writing, have a good payment history, be current, and you may need to prove the value hasn't fallen and that there's no second mortgage |
| Automatic termination | Balance is scheduled to reach 78% of original value under the original amortization schedule | Nothing, as long as you're current |
| Final termination | The month after the loan's midpoint, such as year 15 of a 30-year loan | Nothing, as long as you're current |
"Original value" generally means the lower of the purchase price and the appraised value when you bought the home. After a refinance, it's the appraised value at the time of the refinance.
Key idea Extra payments bring forward the date you can ask for cancellation, but the 78% automatic date is fixed by the original schedule. If you prepay, you have to make the request yourself.
The midpoint rule is a backstop. On an ordinary fixed-rate loan you'll usually pass 78% well before the midpoint; it matters more for loans with interest-only periods or balloon payments.
Worked example: a $342,000 loan with 10% down
Here are the inputs:
- Home price and appraised value: $380,000
- Down payment: $38,000 (10%), so the loan starts at 90% LTV
- Loan: $342,000, 30-year fixed at an illustrative 6.875%
- Principal and interest: $2,246.70 a month
- PMI: an illustrative $150 a month (your quote will differ)
The two thresholds are 80% × $380,000 = $304,000 and 78% × $380,000 = $296,400. Here's how long PMI lasts under four approaches:
| Approach | PMI ends after | PMI paid at $150 a month | Saved vs waiting |
|---|---|---|---|
| Wait for automatic termination | 114 payments (9 yr 6 mo) | $17,100 | $0 |
| Request at 80% on schedule | 99 payments (8 yr 3 mo) | $14,850 | $2,250 |
| Add $200 a month, request at 80% | 65 payments (5 yr 5 mo) | $9,750 | $7,350 |
| Add $500 a month, request at 80% | 43 payments (3 yr 7 mo) | $6,450 | $10,650 |
These figures assume PMI is charged on every payment up to the one that crosses the threshold and that your servicer processes the request promptly.
Two lessons stand out. Simply remembering to ask at 80% saves 15 months of premiums, even with no extra payments. And prepaying works on two fronts: the $200 a month that ends PMI early also cuts total interest on the loan from $466,808 to $349,063, a saving of $117,745, and pays the loan off in 23 years and 7 months if you keep it up. You can see the full effect in our guide to how mortgage amortization works, or model your own loan in the mortgage calculator.
A lump sum instead of monthly extras
After three years (36 payments), the balance in the example is $330,548.60. A one-time prepayment of $26,548.60 would bring it down to $304,000, so you could request cancellation straight away instead of waiting until year 8.
The return on that money is unusually high for a while. It stops $1,800 a year of PMI, which is 6.78% of the lump sum, on top of the 6.875% interest you no longer pay on it. That boost lasts only as long as PMI would otherwise have run (63 more months here, or $9,450 of premiums). Don't drain your emergency fund to do it, because money paid into a house is hard to get back out. If you're weighing this against investing the cash, see extra mortgage payments vs investing.
Using your home's current value
If prices in your area have risen or you've made major improvements, your real equity may be far higher than the original schedule suggests. In the example, after four years the balance is $326,177.39. That's 85.8% of the original $380,000 value, but only 75.9% of a hypothetical new appraisal of $430,000.
The federal 80% and 78% rules use the original value, so they don't help here. Many servicers will consider removing PMI based on current value, but that's their policy (or the policy of whoever owns the loan), not a federal right. Common conditions include a new appraisal that you pay for, a minimum number of years since closing, a lower LTV target than 80%, and a clean payment record. Ask your servicer for its written requirements before you order an appraisal.
Refinancing is the other route. If the new loan is no more than 80% of the home's current value, a new conventional loan won't need PMI. But a refinance brings closing costs and a new rate, so it only makes sense if the rate is similar or lower. Read when refinancing makes sense and run the numbers in the refinance calculator before you apply.
FHA, VA and other loan types
- FHA loans charge a mortgage insurance premium (MIP), both upfront and annually, under FHA's own rules rather than the 78% rule above. Depending on your down payment and when the loan was made, the annual premium can last many years or the life of the loan. Many FHA borrowers remove it by refinancing into a conventional loan once they have at least 20% equity.
- VA loans don't charge monthly mortgage insurance, though most borrowers pay a one-time funding fee.
- Lender-paid mortgage insurance can't be canceled, as noted above.
Canada: mortgage default insurance is generally required when you put down less than 20%. The premium is usually a one-time charge added to the mortgage balance, so there's no monthly charge to cancel later.
Frequently asked questions
Does PMI come off automatically if my home's value goes up?
No. The automatic 78% date depends on the original value and the original schedule. To use a higher current value, you have to ask your servicer and meet its conditions, or refinance.
Can my servicer refuse to cancel PMI at 80%?
It can refuse if you don't meet the conditions: a written request, a good payment history, being current, and, if asked, proof that the value hasn't fallen and no second mortgage. If you meet them, the servicer must cancel.
Is PMI tax-deductible?
The rules on deducting mortgage insurance premiums have changed several times. Check the current IRS guidance for the tax year in question rather than relying on what applied in a previous year.
Is it ever worth paying PMI?
Often, yes. Waiting years to save a full 20% means more years of rent and, possibly, higher prices. Our guide to how much house you can afford shows how PMI fits into your monthly budget, and the home affordability calculator lets you compare different down payments.
A quick checklist
- Find your original value on your appraisal or closing documents, then work out 80% and 78% of it.
- Get your amortization schedule from your servicer or the mortgage calculator and note the month you'll hit each threshold.
- Decide whether extra monthly payments or a lump sum make sense, and confirm your servicer applies extra money to principal.
- Set a reminder for the month you'll reach 80% and send your written request then.
- If your home has gained value, ask your servicer how it handles appraisal-based removal.
- After the 78% date, check your statement to confirm the PMI charge has gone.
This article is for general education and is not financial advice. Rules, rates and products vary by lender and country. See our disclaimer.
