PMI — and How to Get Rid of It
Put less than 20% down on a conventional loan and you're almost certainly paying private mortgage insurance (PMI) — a monthly premium that protects the lender if you default, not you. The good news, unlike some insurance: you can get rid of it, and often sooner than you'd think.
Why you're paying it
A smaller down payment means a higher loan-to-value, which is more risk to the lender, so they require PMI to cover potential loss. The premium commonly runs about 0.3% to 1.5% of the loan per year, scaled by your credit score and LTV — real money that buys you nothing except access to the loan.
The two ways it comes off automatically
Federal law (the Homeowners Protection Act) sets two milestones based on your original value and payment schedule:
- Automatic termination at 78% LTV. Once your balance is scheduled to hit 78% of the home's original value, the servicer must cancel PMI — provided you're current on payments.
- Borrower-requested cancellation at 80% LTV. You don't have to wait for 78%. At 80% you can request cancellation in writing; the servicer may ask for a good payment history and sometimes an appraisal confirming value hasn't dropped.
The faster lever most people miss
Those rules use your original value — but appreciation and extra principal can get you to 80% on current value much sooner. If your home is worth more than you paid, a new appraisal showing 80% or better lets you request cancellation early. The appraisal fee is usually trivial next to a year of premiums.
FHA is a different animal
FHA loans don't carry PMI; they carry a mortgage insurance premium (MIP), and it doesn't follow the same rules. On most modern FHA loans with less than 10% down, MIP lasts the life of the loan — the only real exit is to refinance into a conventional loan once you've built enough equity. That single difference is often reason enough to refinance out of FHA.
By L.W. Martin, Founder — 20 years in the mortgage business, including 15 running his own brokerage. About → · Updated August 2026.