How to Get Rid of PMI

If you have private mortgage insurance, you’re probably looking forward to the day when it ends, sweetly reducing your mortgage payment.

Although you pay for PMI, the coverage protects the lender, not you, against the risk that you'll stop making your mortgage payments. About 16% of mortgages originated in the U.S. from 2020 to 2022 were conventional loans with PMI, according to a 2023 Urban Institute Housing Finance Policy Center report.

Your mortgage servicer is required to cancel your PMI for free when your mortgage balance reaches 78% of the home’s value, or the mortgage hits the halfway point of the loan term, such as the 15th year of a 30-year mortgage. You may be able to get rid of PMI earlier by asking the mortgage servicer, in writing, to drop PMI once your mortgage balance reaches 80% of the home’s value at the time you bought it.

Here’s a closer look at those options and two others for getting rid of PMI. These apply only to private mortgage insurance for conventional loans. The rules are different for mortgage insurance for government-backed mortgages, such as FHA loans.

» MORE: What is mortgage insurance? How it works, when it’s required

1. Wait for automatic cancellation

Eventually, your mortgage insurance will fall away automatically, but it's a good idea to keep track of it.

Request a written copy of your PMI cancellation schedule and your lender’s requirements, so you’ll know when your payments are supposed to stop and can watch your progress.

» MORE: Calculate your PMI costs

2. Request PMI removal sooner

You can save money by removing PMI sooner. When your mortgage balance reaches 80% of the original home value, you can ask the mortgage servicer to cancel PMI. The original value is the lesser of the price you paid for the home or the appraised value of the property when you bought it. If you refinanced, the original value is the appraised amount when you refinanced. The percentage represents your loan-to-value ratio (LTV). To find the LTV, divide the loan balance by the original purchase price or use NerdWallet’s loan-to-value calculator.

Check your PMI schedule, which is based on your home’s original value, to track your progress. Make a written request to your mortgage servicer several months before the mortgage is scheduled to hit 80% LTV and get the process moving.

Alternatively, use a mortgage amortization calculator to figure when you'll hit 80% LTV. You’ll reach the threshold earlier than scheduled if you make extra payments to reduce the principal balance.

To make the case for cancellation you’ll need:

• A good payment history. The rule is no payments 30 days late in the past 12 months and no 60-day late payments in the previous 24 months. Timely payments count when it comes to getting rid of PMI. Late payments can put you in a high-risk category, making canceling harder.

• No other liens. Your mortgage must be the home’s only debt, including second mortgages, home equity loans and lines of credit.

• Proof of value. A home appraisal, at your expense, to prove the home’s value hasn’t fallen. Certain lenders accept a broker price opinion or free, automated valuation instead.

» MORE: What is mortgage amortization?

3. Get a new appraisal to remove PMI

Rising property values might also pave the way for early PMI removal. You can request early PMI cancellation based on the home's current value if, like most conventional loans, Fannie Mae or Freddie Mac backs your mortgage. Fannie and Freddie are the government-sponsored enterprises that purchase mortgages from lenders.

But before spending $300 to $500 on an appraisal, check your lender’s rules. Some lenders require borrowers to use certain appraisers. Others accept a broker price opinion — a quicker, less expensive process.

Here’s a caveat: To cancel based on current value, you must have owned the home for at least two years and have 75% LTV. If you've owned the home for at least five years, you can cancel at 80% LTV.

However, lenders may waive the two-year requirement if the increased value is due to improvements you've made to the property. Maybe you renovated the kitchen and bathrooms or added a bedroom. In that case, the LTV ratio must be 80% or less.

4. Refinance to get rid of PMI

If interest rates have dropped since you took out the mortgage, you might consider refinancing to save money. Besides getting a lower rate, refinancing might also let you get rid of PMI if the new loan balance is less than 80% of the home’s value.

But refinancing will require paying closing costs, which can include myriad fees. You’ll want to make sure refinancing won’t cost you more than you’ll save. Use our refinance calculator to help decide whether it’s time to refinance.

Know your rights

Occasionally, borrowers and lenders knock heads over canceling PMI. If you run into insurmountable obstacles when trying to cancel, complain to the Consumer Financial Protection Bureau.