How to Remove PMI, and Why Nobody Will Do It for You

You have a legal right to cancel PMI once you owe 80% of what the home was worth when you bought it. Most people never exercise it, and wait for the automatic cut-off instead. This guide is the difference between those two dates, and how to claim the earlier one.

Key takeaways

• At 80% you can ask. At 78% they must act. Those are two different dates, and the gap between them is money.
• You must ask in writing. A phone call does not trigger the legal right, and servicers do not volunteer it.
• Both thresholds use the home's ORIGINAL value, not what it is worth today — unless you pay for a new appraisal.
• Overpaying does not move the automatic date. It is fixed by your original schedule. Overpaying only helps if you then ask.
• FHA loans are not covered at all. If you put down less than 10% after June 2013, the only way out is refinancing.

What is PMI, and who does it protect?

Private mortgage insurance is a policy that pays your lender if you stop paying your mortgage. You pay the premium every month; the lender collects if you default. You get nothing from it except the ability to buy with less than 20% down.

That is not a criticism of the product. Without it, a 5% deposit would not buy a house at all. But it does explain the behaviour that follows: the party being protected is the party that decides when to stop charging you, and it has no reason to hurry.

Lenders require PMI on conventional loans when the down payment is under 20%. To see what it is costing you right now, the PMI calculator works it out from your loan size and rate.

If you are still shopping rather than trying to get out, our guide to how much house you can afford shows where that 20% line falls at different prices.

When does PMI go away?

There are three separate dates, set by the Homeowners Protection Act of 1998. You may request cancellation once the balance reaches 80% of the home's original value. The servicer must terminate it automatically at 78%. And it ends at the midpoint of the loan term whatever the balance — 15 years into a 30-year loan.

That midpoint backstop exists for loans paying down too slowly to reach 78% on schedule. It is the reason nobody pays PMI on a 30-year mortgage for the full thirty years — but it is also the worst of the three outcomes, because by then you have paid the premium for a decade and a half.

Why paying extra does not bring the automatic date forward

The 78% termination date is fixed by your original amortisation schedule, not by what you actually owe. Your servicer worked it out on the day the loan closed. Sending extra principal every month does not move it.

This catches people out badly. Someone overpays for three years, reaches 78% well ahead of schedule, and waits for the automatic cancellation that the law says happens at 78% — while the servicer is looking at a date on a schedule that has not changed.

Step 1: Work out where you actually are

Divide what you owe today by the original value. If the answer is 80% or less, you can ask now. The figure you need is on your latest mortgage statement; the original value is on your closing paperwork.

That $8,000 of principal is roughly two years of payments on a typical 30-year loan — two years of PMI premiums you can stop paying simply by writing a letter at the right moment. The amortisation calculator will tell you the month your balance crosses $320,000.

Step 2: Check you qualify

The servicer must cancel if you meet four conditions. These are set by law, not by the lender, which means they cannot invent a fifth.

1. The request is in writing. A phone call does not count.
2. You have a good payment history — and that phrase has a precise legal meaning, below.
3. No junior liens. A second mortgage or a home equity line will block it until it is cleared.
4. The value has not fallen below the original value. The servicer may ask you to prove it.

"Good payment history" is defined exactly, and no page in the search results states it. Under the Act it means no payment 60 or more days late in the two years before cancellation, and no payment 30 or more days late in the twelve months before it.

Step 3: Write to your servicer

Send it in writing and keep a copy. The written request is what starts the legal clock; a phone call leaves you with nothing to point at. Your servicer's address for written requests is on your statement — it is often different from the payment address.

There is no official form. This covers everything the law requires, and nothing it does not:

Two details make the difference. Name the Act — it tells the person reading it that you know this is a legal right rather than a favour. And ask for the answer in writing, including anything else they need, so a vague refusal becomes a specific one you can act on.

Step 4: If they ask for an appraisal

The servicer can require evidence the home has not lost value, and you pay for it. They choose the appraiser. This is legitimate and it is in the Act.

It is also the point where a second route opens. If your home has risen in value, an appraisal can get you to 80% long before your payments would — a rise from $400,000 to $460,000 means the same $340,000 balance is now 74% of the current value rather than 85% of the old one.

Lenders do not have to accept current value for the legal cancellation at 80%, which is set against the original figure. But most will consider it under their own policies, and Fannie Mae and Freddie Mac both allow it with seasoning requirements — typically two years, or five if the increase came from improvements you made. Ask your servicer what their rule is before paying for an appraisal.

What if your servicer refuses?

Ask for the refusal in writing, with the reason. Most refusals are procedural rather than final — a missing certification, a junior lien they can see and you had forgotten, a payment record that does not meet the legal test.

If you believe the refusal is wrong, you can file a complaint with the Consumer Financial Protection Bureau, which supervises servicers under this Act and requires a response. Complaints are free and go on the record.

One entitlement that is almost never mentioned: when PMI ends, the servicer must refund any unearned premiums you have already paid. If that refund does not appear, ask for it.

FHA loans do not work this way

An FHA loan does not carry PMI. It carries MIP, and the Homeowners Protection Act does not apply to it. None of the dates above exist for FHA borrowers, which is the single most common misunderstanding on this subject.

If you put down less than 10%, the only way to stop paying is to refinance into a conventional loan, which generally needs around 20% equity. Whether that is worth it depends on the rate you would be swapping into — the refinance calculator compares the total cost both ways.

Lender-paid PMI cannot be cancelled at all

If your lender offered a slightly higher interest rate instead of a monthly PMI line, that is lender-paid PMI, and none of this applies. The cost is baked into your rate for the life of the loan. There is no threshold and no letter.

It is not a scam, and at the time it often looks cheaper. But it is worth knowing which one you have before you spend an afternoon writing letters. Check your closing disclosure: if there is no separate mortgage insurance line in your monthly payment but your rate looked high for your credit score, this is probably why. The only exit is refinancing.

Common mistakes

Waiting for it to fall off. It will, eventually, at 78% or the midpoint. Waiting is the most expensive option available and it is what most people do.

Phoning instead of writing. The legal right attaches to a written request. A call gets you an opinion from whoever answers; a letter gets you an obligation.

Overpaying and then waiting. Extra principal does not move the automatic date, which was fixed on the day you closed. It only helps if you ask.

Assuming a rising market has already fixed it. The legal thresholds run off the original value. Today's higher value only counts if you pay for an appraisal and your servicer's own policy allows it.

Assuming one late payment disqualifies you. It depends entirely on how late and how long ago. Check your record against the actual definition before giving up.

Treating FHA MIP as though it were PMI. Different product, different law, and on most post-2013 FHA loans there is no cancellation at any equity level.

Next steps

1. Find your original value on your closing paperwork — the purchase price or the appraisal, whichever was lower.
2. Multiply it by 0.80. That is the balance you are aiming for.
3. Check your latest statement for what you owe today.
4. Work out the month you cross it with the amortisation calculator, if you are not there yet.
5. Send the letter the month you arrive, and keep a copy.