What Is PMI Removal?
PMI Removal: Ending private mortgage insurance once you reach enough equity, by request at 80% or automatically at 78%.
Private mortgage insurance on a conventional loan can be removed once you build enough equity. Federal law (the Homeowners Protection Act) sets the main rules.
Ways to remove PMI
- By request: when your balance reaches 80% of the original value, through scheduled payments or extra principal. You must be current on payments, and the servicer can require that the value hasn't dropped.
- Automatically: when your balance is scheduled to reach 78% of the original value
- Halfway point: at the midpoint of the loan term, even if you haven't reached 78%
- Based on a new value: many servicers allow removal based on a new appraisal if the home has risen in value, often after you've owned it for at least two years
Good to know
These rules apply to borrower-paid monthly PMI. FHA mortgage insurance works differently and often requires a refinance to remove.