What is PMI and how do you remove it?
Private mortgage insurance (PMI) is required by conventional lenders when your down payment is less than 20%. It protects the lender — not you — if you default. Once you reach 20% equity, you can request cancellation and save hundreds of dollars per month.
Under the Homeowners Protection Act, your lender must automatically cancel PMI when your loan balance reaches 78% of the original purchase price. You can request cancellation earlier at exactly 80% LTV by contacting your servicer in writing.
Frequently asked questions
When can I remove PMI from my mortgage?
Under the Homeowners Protection Act, your lender must automatically cancel PMI when your loan reaches 78% LTV of the original purchase price. You can request cancellation earlier at 80% LTV (20% equity).
How much does PMI cost?
PMI typically costs 0.5%–1.5% of the loan amount annually. On a $300,000 loan that is $1,500–$4,500 per year, or $125–$375 per month added to your payment.
Can home appreciation remove PMI early?
Yes. If your home value has increased significantly, you may be able to request early PMI cancellation with a new appraisal showing 20% equity — even before your payments reach that threshold.
Is FHA mortgage insurance the same as PMI?
No. FHA loans use mortgage insurance premiums (MIP) which often last the life of the loan if your down payment was under 10%. Refinancing to a conventional loan is typically the only way to remove FHA MIP.