If you bought a home with less than 20% down, a line item on your monthly statement has probably been taking $150 or more from you every month for years: private mortgage insurance, or PMI. It protects your lender, not you, and it builds you no equity. The good news is that PMI has a legal off-switch, and most homeowners reach it years before their lender bothers to mention it.

The short version: on a conventional loan, federal law lets you ask your servicer to cancel PMI once your balance reaches 80% of the home's original value, and requires your servicer to drop it automatically at 78%. If your home has risen in value, a new appraisal can get you there faster still. The difference between knowing these rules and not knowing them is often thousands of dollars.

What PMI actually costs you

Lenders require PMI on conventional loans when the down payment is under 20%, because a thin equity cushion means more risk for them. The premium typically runs from 0.3% to 1.5% of the original loan amount per year, folded into your monthly payment. On a $360,000 loan — the mortgage on a $400,000 home with 10% down — that is roughly $90 to $450 a month, with 0.5% working out to about $150 a month, or $1,800 a year.

That money buys you nothing: it does not reduce your balance, build equity, or lower your rate. Over the nine years it can take to reach the automatic cancellation point, $150 a month adds up to more than $16,000 — paid for insurance that only ever protected the bank. Every month you shave off the timeline is real money back in your pocket.

The two numbers that matter: 80% and 78%

Both thresholds come from the federal Homeowners Protection Act of 1998, and both are measured against the home's original value — the lower of the purchase price and the appraisal at closing — not what the home is worth today.

80% loan-to-value: you can request cancellation. Once your loan balance falls to 80% of the original value, you have the right to ask your servicer in writing to cancel PMI. The servicer must comply if you meet the conditions: your payments are current, you have a good payment history (no payment 30 or more days late in the past 12 months, and none 60 or more days late in the 12 months before that), the home's value has not fallen below its original value, and there are no junior liens — such as a second mortgage or HELOC — that would push your combined loan-to-value above 80%.

78% loan-to-value: cancellation is automatic. Your servicer must terminate PMI on the date your balance is scheduled to reach 78% of the original value under the original amortisation schedule, as long as you are current on payments. Two catches: the schedule is the one you signed at closing, so extra principal payments do not speed up automatic termination — they only help you reach the 80% request sooner. And PMI cannot extend past the midpoint of your loan term, so on a 30-year mortgage it is gone by year 15 no matter what. If your loan was classed as high-risk at origination, the automatic threshold is 77% rather than 78% — one more reason to request cancellation at 80% instead of waiting.

A worked example: how long does it actually take?

Take a $400,000 home bought with 10% down: a $360,000 loan at 6.5% over 30 years, with a principal-and-interest payment of about $2,275 a month. On the original schedule, the balance falls to $320,000 — 80% of the original value — in month 95, just under eight years after closing. The 78% point, a $312,000 balance, arrives in month 109, just over nine years.

At $150 a month for PMI, waiting for automatic termination instead of requesting cancellation at 80% costs roughly 14 extra months — about $2,100. And that is the best case for waiting. Many homeowners never request cancellation at all, and simply keep paying PMI until the automatic date — or worse, never notice it is still there.

80% threshold: $400,000 × 0.80 = $320,000 balance · 78% threshold: $400,000 × 0.78 = $312,000 balance · PMI at 0.5%: $360,000 × 0.005 ÷ 12 ≈ $150/month

The faster route: a new appraisal

The 80% and 78% rules use your home's original value. But if your home has appreciated, the rules for Fannie Mae and Freddie Mac loans let you cancel based on current value instead — and that can cut years off the wait. On a one-unit primary residence, your servicer can cancel PMI when the loan balance is 75% of the current appraised value once the loan is at least two years old, or 80% of current value once it is five years old. Fannie Mae imposes a minimum two-year seasoning period before any cancellation based on current value, so this route is not available in the first two years.

Run the numbers on that same $400,000 home. Suppose after three years it appraises at $460,000 and your balance is $345,000. That is exactly 75% of current value — you qualify. You will pay for the appraisal yourself, typically $300 to $500, and the servicer may order its own valuation instead. Against $150 a month in PMI, the appraisal pays for itself in about three months.

Two warnings: the route only works if values have actually risen — a low appraisal can also complicate a future request. And for two-to-four-unit or investment properties, Fannie Mae requires 70% of original value before you can request cancellation, so the rules are stricter outside the single-family primary-home case.

How to request cancellation, step by step

1. Check your balance against the original value. Find your original purchase price or closing appraisal — whichever was lower — and multiply by 0.80. If your current balance is at or below that number, you qualify to ask. Our mortgage calculator shows your amortisation schedule and current balance if you want to check the numbers first.

2. Confirm your payment history is clean. No payment 30+ days late in the last year, none 60+ days late in the year before that. If you have a recent late payment, wait until it ages out of the window.

3. Send a written request to your servicer. Call first to ask for their PMI cancellation form and exact requirements — every servicer has its own process — then submit the request in writing and keep a copy. Servicers are expected to act within about 30 days once all conditions are met, and any PMI premium paid in advance after the cancellation date should be refunded.

4. Follow up in writing if nothing happens. If the servicer stalls, a written complaint referencing the Homeowners Protection Act — and, if needed, a complaint to the Consumer Financial Protection Bureau — tends to get attention fast. Keep records of every call, letter, and payment.

Speed it up: extra principal payments

Because the 80% request is based on your actual balance, every extra dollar of principal brings the date forward. On that same $360,000 loan, adding just $200 a month to the principal payment moves the 80% date from month 95 to about month 64 — nearly three years sooner. That saves roughly 31 months of PMI, or about $4,650 at $150 a month, on top of the interest saved over the life of the loan. Extra payments do nothing to the 78% automatic date, which is fixed to the original schedule — but they move the 80% request date as fast as you can pay. If you are already making extra payments, check your balance now: you may have crossed 80% months ago.

When PMI does not drop off: FHA, VA, USDA, and lender-paid PMI

Everything above applies to conventional loans with borrower-paid PMI. Other loan types play by different rules, and this is where many homeowners get stuck:

  • FHA loans do not have PMI — they have mortgage insurance premium (MIP), which the Homeowners Protection Act does not cover. For FHA case numbers assigned on or after June 3, 2013, annual MIP lasts 11 years if you put at least 10% down, and for the life of the loan if you put less down. The only way out is usually to refinance into a conventional loan once you have 20% equity.
  • VA loans charge no monthly mortgage insurance at all — just a one-time funding fee rolled into the loan. If something that looks like PMI appears on a VA loan statement, call your servicer.
  • USDA loans charge an annual fee for the life of the loan, with no cancellation right. Refinancing into a conventional loan is again the usual exit.
  • Lender-paid PMI (LPMI) cannot be cancelled. It is baked into your interest rate in exchange for no monthly premium, so the only exit is refinancing into a new loan without it.

If you are unsure which kind you have, your closing disclosure or your servicer's website will say so. Do not assume the 80/78 rules apply until you have confirmed it is a conventional loan with borrower-paid PMI.

Mistakes worth avoiding

Waiting for the automatic date. The 78% termination is a safety net, not a strategy. Requesting at 80% — or via appraisal at 75% of current value — routinely saves a year or more of premiums.
Forgetting the appraisal route. In a rising market, your equity may already be past 75% of current value while your balance is still well above 80% of the original price. An appraisal is the fastest exit most homeowners never try.
Paying for PMI you no longer owe. Servicers do make errors. Check your statement every year: if your balance has crossed 80% of original value and PMI is still there, you are owed a cancellation — and a refund of any premiums paid after the date it should have ended.

Find your PMI drop-off date

Enter your loan balance, rate, and home value — our mortgage calculator shows your amortisation schedule and when you cross 80%.

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Bottom line

PMI is not permanent, and it is not something you have to wait out passively. On a conventional loan, the law gives you a request right at 80% of original value, an automatic exit at 78%, and — if your home has gained value — an appraisal route that can end it years early. Check your balance against 80% of what you paid, and if you are already there, write to your servicer this week. The $150 a month you save is money that should have been building your equity all along.