Private mortgage insurance (PMI) is a policy on a conventional loan that pays the lender, not you, if you stop making payments. By federal law you can ask your servicer to cancel it once your balance is scheduled to reach 80% of the home's original value, and the servicer must end it automatically at 78%, as long as you are current on payments. How to stop paying PMI depends on which rule applies to your loan, and FHA loans follow a different set of rules.
Key takeaways
- Under the Homeowners Protection Act, you may request cancellation at 80% of original value, PMI must end automatically at 78%, and it must end the month after the loan's midpoint (year 15 on a 30-year loan) if it is still running.
- Cancellation on request needs a written request, a good payment history, current payments, proof the home has not lost value and a certification of no second lien.
- Fannie Mae's Servicing Guide also allows removal based on current value after at least two years: 75% or less for loans seasoned two to five years, 80% or less after five years, with a new valuation. Other loan owners set their own terms, so confirm with your servicer.
- FHA mortgage insurance is not PMI; on loans with case numbers assigned since June 3, 2013, its length is set by the loan-to-value ratio at origination, not by later paydown.
- Original value usually means the lower of the purchase price or the purchase appraisal, so home price growth does not move the 80% and 78% dates.
What PMI is and who it protects
The Consumer Financial Protection Bureau (CFPB) explains that PMI protects the lender, not you, if you stop paying. You may need it on a conventional loan when your down payment is under 20%. It can be billed as a monthly premium added to your payment, as a one-time up-front premium at closing that may not be refunded if you move or refinance, or as a combination of both. Your Loan Estimate and Closing Disclosure show which structure applies.
Loan-to-value (LTV) is the loan balance divided by the home's value. Removal rules use LTV, but they differ on which value counts: the original value (a fixed number set at purchase) or the current value (a new appraisal or valuation). Most of the confusion about PMI comes from mixing the two.
The three federal removal dates
The Homeowners Protection Act (12 U.S.C. 4902) sets three points. The CFPB says these rules cover single-family principal residences with loans closed on or after July 29, 1999. The Act's definitions in 12 U.S.C. 4901 define the original value as the lesser of the contract sales price or the appraised value. For a refinance of a principal residence, it is the appraised value the lender relied on.
| Point | When it applies | What you must do |
|---|---|---|
| 80% (cancellation) | Balance is scheduled to reach, or actually reaches, 80% of original value | Ask in writing; have a good payment history and be current; show value has not fallen below original value; certify no subordinate lien |
| 78% (automatic termination) | Balance is first scheduled to reach 78% of original value | Nothing, but you must be current; if you are behind, PMI ends after you catch up |
| Midpoint (final termination) | The month after the halfway point of the amortization schedule, such as year 15 of 30 | Nothing, but you must be current |
Three details matter. First, on a fixed-rate loan the 78% date comes from the initial amortization schedule, so it is set when the loan is made and does not move if you pay extra (an adjustable-rate loan uses the schedule in effect at the time, and a loan modification resets the dates to the modified terms). Under the original-value rules, extra payments help only if they bring you to 80% earlier and you ask. The CFPB confirms you can ask early if extra payments bring the balance to 80%.
Second, the statute defines a good payment history as no payment 30 or more days late in the 12 months before the later of your 80% date or your request, and no payment 60 or more days late in the 12 months before that (months 13 to 24). Third, the servicer cannot collect premiums more than 30 days after the termination date or, for a request, after the later of the day it receives your request or the day you meet the evidence and lien requirements; any unearned premiums must be returned within 45 days of the cancellation or termination.
One exception is easy to miss. The 80% and 78% rules do not apply to a loan the lender classified as high risk at closing, using Fannie Mae and Freddie Mac guidelines for conforming loans or the lender's own standards for larger loans. For those larger high-risk loans, PMI ends when the balance is first scheduled to reach 77% of original value, and the midpoint rule still applies to all high-risk loans. If you are unsure whether your loan is in this group, ask your servicer.
Servicers of loans owned by Fannie Mae follow its Servicing Guide, which for loans closed on or after July 29, 1999 on one-unit primary or second homes terminates mortgage insurance at 78% or at the amortization midpoint. On two- to four-unit primary residences and on investment properties, Fannie Mae's guide applies the midpoint rule instead. The CFPB adds that investor rules cannot be less favorable to you than the federal standard.
Removal based on current value
If your home has gained value, you may not need to wait for the original-value dates. Fannie Mae's guide lets a borrower ask for termination based on current value after the loan has been outstanding for at least two years, with a valuation from an interior and exterior inspection. The thresholds on a one-unit primary residence or second home are:
- Seasoning of two to five years: LTV of 75% or less of current value.
- Seasoning of more than five years: LTV of 80% or less.
- If the two-year minimum is waived because the borrower's improvements raised the value: LTV of 80% or less. Repairs that only maintain the property do not count.
- One- to four-unit investment properties and two- to four-unit primary residences: 70% or less, with seasoning of more than two years.
The payment history is stricter than many borrowers expect: current at the time of the request, no payment 30 or more days late in the last 12 months, and no payment 60 or more days late in the last 24 months. The two-year seasoning requirement belongs to this current-value route only, not to the 80% and 78% dates under the federal Act. If someone else took over the loan by assumption, the guide requires the new borrower to have 24 months of payment history on it first.
The figures above are from the guide topic as posted in the October 2026 edition; Fannie Mae can revise these requirements through lender letters between guide updates, so ask your servicer for the thresholds it applies to your loan. Loans owned or guaranteed by other investors may have other thresholds.
A worked example with numbers
Illustrative example, not a quote. Assume a $400,000 purchase price (also the appraised value), 10% down, a $360,000 30-year fixed loan at 6.5%, and PMI costing 0.6% of the original loan per year, which is $180 a month. These are round numbers chosen for the arithmetic; real PMI pricing varies by lender, credit and down payment.
Monthly payment (principal and interest) = $2,275.44
80% of original value = 0.80 x $400,000 = $320,000
78% of original value = 0.78 x $400,000 = $312,000
- The scheduled balance first falls to $320,000 or less at month 95 (balance about $319,708), about 7 years and 11 months in.
- It first falls to $312,000 or less at month 109 (balance about $311,822), about 9 years and 1 month in. The midpoint is month 180, so it does not come into play.
- Asking at month 95 instead of waiting for automatic termination at month 109 saves 14 months of PMI: 14 x $180 = $2,520.
Now suppose the home is worth $450,000 after six years (month 72), with the scheduled balance at about $331,435. That is 73.7% of current value, which is under the 80% threshold for a loan seasoned more than five years. A current-value request could end PMI roughly 23 months before month 95, worth 23 x $180 = $4,140 in premiums, before the cost of the valuation. At month 36 the same $450,000 value gives 77.1%, which misses the 75% line for a two-to-five-year-old loan; the home would need to be worth about $463,000 to qualify then.
The lesson is narrow: asking on the first eligible day is worth about a year of premiums in this example, and a rising market can beat the schedule, but only after the seasoning and valuation conditions are met. A value drop works the other way: the statute requires evidence that value has not fallen below the original value for a request at 80%.
FHA mortgage insurance is different
FHA loans carry a mortgage insurance premium (MIP), not PMI, and the 80% and 78% rules above do not apply. The CFPB notes that FHA and VA loans have different rules. HUD's model borrower notice says monthly MIP runs for the first 11 years (or to the end of the term, if sooner) when the original LTV is 90% or less, and for the first 30 years or the end of the term when the original LTV is above 90%. The premium table in HUD's Mortgagee Letter 2023-05, which set annual rates for loans endorsed on or after March 20, 2023, uses the same split: 11 years at 90% LTV or less, the full mortgage term above 90%.
Paying the balance down does not shorten that schedule on newer loans. The HUD premium page says the paydown option, which lets the servicer move the final premium date once extra payments bring the balance to 78% or less, is limited to loans that closed after December 31, 2000 with an FHA case number assigned before June 3, 2013. For case numbers assigned on or after June 3, 2013, FHA insurance can be terminated if the mortgage is paid in full before maturity, for example when the home is sold or the loan is refinanced. The same page notes that the insurance agreement is between FHA and the mortgage company, so ask your servicer for your loan's final premium date in writing.
Refinancing to drop PMI
A refinance into a conventional loan at or below 80% of the new appraised value typically carries no PMI, and it is also the usual way out of FHA MIP on newer loans, since paying off the FHA loan ends that insurance. But the CFPB warns that refinancing with less than 20% equity can bring PMI back.
The comparison is the break-even point: closing costs divided by the monthly PMI saved, adjusted for any change in the interest rate. Illustrative example: $5,000 of closing costs against $180 a month of PMI is 5,000 / 180 = about 28 months, assuming the rate does not change. If the new rate is higher, the break-even is longer. If PMI is going to end on its own within six months, the most it could save in this example is 6 x $180 = $1,080, well short of $5,000 in closing costs.
Frequently asked questions
What happens to PMI if I am behind on payments at 78%?
Automatic termination only happens if you are current. If you are not, the statute says PMI ends on the first day of the first month that begins after you become current. Fannie Mae's guide adds that the servicer must tell you within 30 days after the termination date that PMI was not removed because payments were not current, and must remove it once a later review finds you current.
Do I need an appraisal to cancel PMI at 80%?
The statute requires evidence that your home's value has not declined below its original value, and the CFPB gives an appraisal as an example of that evidence. Under Fannie Mae's guide, a system value or a broker price opinion or appraisal at or above the original value also supports termination. Ask the servicer what evidence it accepts before you order one.
Can a second mortgage or HELOC block cancellation?
Yes. A borrower-requested cancellation under the federal Act requires a certification that the equity is unencumbered by a subordinate lien, such as a second mortgage. The CFPB lists the same condition. If you have a junior lien, ask the servicer whether it can be handled before you request cancellation.
Is lender-paid PMI or an up-front premium canceled the same way?
No for lender-paid PMI. Under 12 U.S.C. 4905, the 80% and 78% rules do not apply when the lender pays the premium; it cannot be canceled by the borrower, usually comes with a higher interest rate, and ends only when the loan is refinanced or paid off. The lender must tell you this in writing by the loan commitment. A one-time up-front premium you pay yourself is different: the CFPB notes it may not be refunded if you move or refinance, and the Loan Estimate shows it on page 2, section B.
Does the midpoint rule matter for most loans?
Rarely on a standard loan, since in the example above the balance on a 30-year fixed loan reaches 78% around year 9, well before year 15. The midpoint backstop matters mainly when the balance falls slowly, for example with interest-only periods, principal forbearance or balloon payments, as the CFPB notes.
Steps to take this month
- Find the loan type on your statement. If it is FHA, ask the servicer for the final premium date in writing. FHA and VA loans follow their own rules; the steps below are for conventional loans with borrower-paid PMI.
- Locate the PMI disclosure from closing, which the CFPB says shows the first date you can ask for cancellation, and compare it with your current balance.
- Check your payment history for 30-day and 60-day late payments, and check for any second mortgage or HELOC.
- If you are at 80% of original value, send a written request with the evidence the servicer accepts. If the home has risen in value and the loan is more than two years old, ask in the same letter about current-value removal.
- Keep a copy and ask for the effective date in writing, then check the next statement.
This article is general education, not personalized advice; your loan documents and servicer set the exact terms for your account.
Sources
- CFPB: What is private mortgage insurance?
- CFPB: How and when PMI can be removed from a loan
- 12 U.S.C. 4902, Termination of private mortgage insurance (Homeowners Protection Act)
- 12 U.S.C. 4901, Definitions
- 12 U.S.C. 4905, Disclosure requirements for lender paid mortgage insurance
- Fannie Mae Servicing Guide B-8.1-04, Termination of Conventional Mortgage Insurance
- HUD Mortgagee Letter 2023-05, FHA annual MIP rates and durations
- HUD model Informed Consumer Choice Disclosure Notice
- HUD: Single Family mortgage insurance premiums
