When Does PMI Come Off? Three Ways to Kill It Faster

Private Mortgage Insurance (PMI) is the fee you pay the lender for the privilege of putting less than 20% down. It protects them — not you. It typically costs 0.3%–1.5% of the loan amount per year, and on a $400,000 loan that's $1,200–$6,000 a year of money lighting itself on fire.

The good news: PMI is temporary. Federal law, lender rules, and a few smart strategies can end it faster than you'd think.

The three ways PMI ends

1. Automatic termination at 78% LTV. By federal law (the Homeowners Protection Act of 1998), your lender must automatically cancel PMI when your loan-to-value ratio reaches 78%, based on the original amortization schedule — as long as you're current on payments.
2. Borrower-requested cancellation at 80% LTV. You can request cancellation once you hit 80% LTV, either through normal amortization or by prepayments. You must submit the request in writing, be current on payments, and meet any lender-specific requirements (e.g., good payment history).
3. Mid-point of the loan. PMI must be terminated at the midpoint of your amortization schedule regardless of LTV, as long as you're current. For a 30-year loan, that's year 15.

LTV — the only number that matters

Loan-to-Value = Current Loan Balance ÷ Original Home Value (for automatic cancellation) or Current Balance ÷ Current Appraised Value (for borrower-requested cancellation with an appraisal).

At 10% down, you start at 90% LTV. At 5% down, you start at 95% LTV. The faster you shrink that number, the sooner PMI dies.

Strategy 1: Pay extra principal

Every extra dollar of principal moves your LTV down. On a $400,000 loan starting at 95% LTV, adding $200/month in extra principal can reach 80% LTV about 3–4 years faster than the standard schedule — eliminating years of PMI payments.

On a 0.75% PMI rate, that's ~$2,500/year × 4 years = $10,000 saved just from killing PMI early, on top of the interest savings from paying down principal.

Strategy 2: Get a new appraisal

If your local market has appreciated — or you've done significant renovations — your current value may be high enough to push LTV under 80% without any extra payments. Call your servicer, ask about their appraisal process. Expect to pay $400–$600 out of pocket for the appraisal. If it works, it can kill PMI years early.

Most lenders require the loan to be seasoned for at least 2 years before they'll accept a market-based appraisal, and some require 5.

Strategy 3: Refinance

If interest rates have dropped and your home has appreciated, a refinance can both lower your rate and eliminate PMI in one shot. This only makes sense if the combined savings beat your closing costs within a reasonable timeframe. See our refinance break-even guide for the math.

FHA loans: a different animal

FHA loans don't have PMI — they have MIP (Mortgage Insurance Premium), and the rules are much worse:

• FHA loans originated after June 2013 require MIP for the life of the loan if your down payment was under 10%.
• If your down payment was 10%+, MIP lasts 11 years.
• There is no automatic cancellation at 78% LTV for these loans.

The only way to kill lifetime FHA MIP is to refinance into a conventional loan once you have 20% equity. Many FHA borrowers do exactly this once they qualify — the rate may go up slightly, but the MIP savings almost always win.

What about VA and USDA loans?

VA loans have no monthly PMI — only a one-time "funding fee" at closing. USDA loans have a monthly guarantee fee that works similarly to PMI but is typically lower and lasts the life of the loan.

Common mistakes

• Assuming your servicer will automatically cancel at 80%. The law only requires them to cancel at 78%. Between 80% and 78%, you have to request it.
• Missing payments. If you're not current, PMI cancellation is paused regardless of LTV.
• Ignoring single-premium PMI. If you paid PMI upfront at closing (single-premium), there's usually nothing to cancel — it was a one-shot deal.
• Forgetting to cancel after refinancing into a conventional loan. Post-refi, you still need to track your LTV and request cancellation.

Sample letter to your servicer

Date: [Date]
To: [Servicer Name], Loan Servicing Department
Re: Loan # [Your Loan Number]

I am writing to formally request cancellation of private mortgage insurance (PMI) on the above loan under the Homeowners Protection Act of 1998.

Based on my current loan balance of $___ and the original home value of $___ , my current loan-to-value ratio is __%, which is at or below 80%.

Please confirm cancellation in writing and apply PMI removal effective the next billing cycle. I am current on all payments and in good standing.

Sincerely,
[Your Name]

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