How to Get Rid of PMI: 6 Ways to Cancel Mortgage Insurance

Private mortgage insurance protects your lender, not you — so the sooner you can drop it, the more money stays in your pocket. Here's exactly when PMI cancels on its own and how to remove it faster.

If you bought a home with less than 20% down, you're probably paying private mortgage insurance (PMI) — typically 0.5% to 1% of your loan amount per year, baked into your monthly payment. On a $300,000 loan that's roughly $1,500 to $3,000 a year for a policy that does nothing for you directly. The good news: PMI is temporary, and you have several ways to end it.

First, understand how PMI cancellation works

PMI is tied to your loan-to-value ratio (LTV) — your loan balance divided by the home's value. As you pay down the loan (and as your home appreciates), your LTV falls and your equity rises. Federal rules under the Homeowners Protection Act give you specific rights once you hit certain thresholds.

The 80% rule (you request it)

Once your loan balance reaches 80% of the original purchase price — meaning you have 20% equity — you can ask your lender in writing to cancel PMI. This doesn't happen automatically; you have to request it.

The 78% rule (automatic)

When your balance reaches 78% of the original value, your servicer is legally required to cancel PMI automatically, as long as you're current on payments. This is the backstop if you forget to request it at 80%.

6 ways to remove PMI

1. Wait for automatic cancellation

The simplest path: keep making payments and PMI falls off at 78% LTV. The downside is it's the slowest route, because it's based purely on scheduled principal paydown.

2. Request cancellation at 20% equity

Don't wait for 78%. Once you hit 80% LTV on the original value, send a written request. Your lender may require that you have a good payment history and no second liens, and sometimes a current appraisal to confirm value.

3. Make extra principal payments

Paying a little extra toward principal each month — or one lump sum — pushes you to the 80% mark sooner. Even an extra $100–$200 a month can shave months or years off your PMI.

4. Get a new appraisal after your home appreciates

If home values in your area have risen, your equity may already exceed 20% even if you haven't paid the balance down that far. Many lenders let you order a new appraisal (you'll pay a few hundred dollars) to prove the higher value and cancel PMI early.

5. Refinance out of PMI

If you now have 20%+ equity, refinancing into a new conventional loan eliminates PMI entirely — and may lower your rate at the same time. Just weigh the closing costs against the savings. Our refinance guide walks through the break-even math.

6. Renovate to increase value

Significant improvements can raise your appraised value, lifting your equity above 20%. Combine this with method #4 (a fresh appraisal) to remove PMI ahead of schedule.

FHA loans are different

Note that FHA loans carry MIP (mortgage insurance premium), not PMI, and the rules are stricter — on most modern FHA loans, MIP lasts the life of the loan unless you refinance into a conventional mortgage. If you have an FHA loan and now hold 20% equity, refinancing is usually the only way to drop the insurance.

The bottom line

PMI is a temporary cost, not a permanent one. Track your loan-to-value ratio, request cancellation the moment you hit 20% equity, and consider extra payments or a fresh appraisal to get there faster. Over the life of a loan, dropping PMI early can save thousands.