PMI Cancellation Strategies: 5 Proven Ways to Eliminate [Private Mortgage Insurance](/blog/mortgage-insurance-pmi-guide)

Private mortgage insurance (PMI) is the fee lenders charge when your down payment is less than 20% of the home's purchase price. On the surface, it protects the lender — but you're the one paying for it. PMI typically costs between 0.5%–1.5% of your loan amount annually, which translates to $100–$500+ per month on a typical mortgage.

The good news: PMI doesn't have to last forever. Federal law and smart financial strategies give you multiple paths to eliminate it — often far sooner than your lender will voluntarily mention.

Here's everything you need to know about killing your PMI payment as fast as possible.

Understanding PMI: The Basics Before You Eliminate It

PMI kicks in on conventional loans when you put down less than 20%. It's added to your monthly mortgage payment until you reach a certain equity threshold. The actual cost varies by:

• Loan size (PMI scales with the loan balance)
• Your credit score (better credit = lower PMI rate)
• Down payment amount (closer to 20% = lower PMI rate)
• Loan-to-value ratio (LTV)

FHA loans have their own version called MIP (Mortgage Insurance Premium), which operates under different rules. Loans originated after June 2013 with less than 10% down require MIP for the life of the loan — making elimination strategies different for FHA borrowers (more on that below).

Your Legal Rights Under the Homeowners Protection Act

Before diving into strategies, know your federal rights. The Homeowners Protection Act (HPA) of 1998 — also called the PMI Cancellation Act — gives conventional loan borrowers automatic PMI protections:

Borrower-Requested Cancellation:
You can formally request PMI cancellation when your loan balance drops to 80% of your home's original purchase price (20% equity). Your lender must cancel PMI if:

• Your loan balance is at or below 80% LTV based on original value
• You have a good payment history
• Your lender can verify the property hasn't declined in value

Automatic Termination:
If you don't request cancellation, your servicer is legally required to automatically cancel PMI when your loan balance reaches 78% of the original purchase price — even if you don't ask. This happens based on your original [amortization schedule](/blog/amortization-schedule-guide), not actual extra payments.

Final Termination:
Even if you've never reached 80% LTV (perhaps due to interest-only periods or slow equity growth), lenders must terminate PMI when you reach the midpoint of your loan term — typically year 15 of a 30-year mortgage.

Understanding these rights matters because your servicer is legally obligated to follow them — but they won't always proactively alert you.

Strategy 1: Make Extra Principal Payments

The most straightforward strategy is accelerating your principal paydown to reach the 80% LTV threshold faster. Every dollar you apply to principal reduces your loan balance and moves you closer to PMI elimination.

How to calculate your target payoff:

PMI Cancellation Balance = Original Home Price × 0.80

If you bought your home for $380,000, your PMI elimination target is $304,000 in loan balance.

Tactics to get there faster:

• Make one extra principal payment per year (even $500 accelerates payoff meaningfully)
• Apply windfalls — tax refunds, bonuses, gifts — directly to principal
• Set up biweekly payments instead of monthly (you make 26 half-payments = 13 full payments per year) — learn more about biweekly mortgage payment strategies
• Round up every payment (paying $1,650/month instead of $1,587 saves years)

Important: Always contact your servicer to confirm extra payments are applied to principal, not interest or future payments.

Strategy 2: Request Cancellation at 80% LTV Based on Original Value

Once your scheduled or actual payments reduce your balance to 80% of the original purchase price, you have the right to formally request PMI cancellation.

Steps to request cancellation:

1. Write a formal written request to your mortgage servicer
2. Verify your balance is at or below 80% LTV (original value basis)
3. Demonstrate a good payment history (no 30-day lates in the past year, no 60-day lates in the past 2 years)
4. Confirm the property value hasn't declined (your lender may request confirmation)

Your lender must respond within 30 days. If they agree, PMI ends immediately. If they're not sure about the home's current value, they may require a property value certification.

Pro tip: Don't wait for your servicer to automatically cancel at 78% — request it at 80% and get 2 months of PMI-free payments sooner.

Strategy 3: Use a New Appraisal to Demonstrate Current Market Value

This is where savvy homeowners save thousands: if your home has appreciated significantly since purchase, you may already be at 80% LTV — even without making extra payments.

Under the Homeowners Protection Act, lenders can (but aren't required to) allow PMI cancellation based on current appraised value rather than original purchase price. Many lenders allow this after 2 years of ownership; some allow it sooner.

Example:

• Purchased for $350,000 with 10% down ($315,000 loan balance)
• Home now appraised at $450,000
• Current LTV: $315,000 ÷ $450,000 = 70% — well below the 80% threshold

In this case, even without paying down the loan significantly, your current value qualifies you for PMI cancellation.

How to pursue this:

1. Get a rough estimate of your home's current value (check Zillow, Redfin, and comparable sales)
2. Contact your servicer to ask about PMI cancellation based on current value
3. Order a formal appraisal through your lender's approved appraiser list
4. Submit the appraisal and formal cancellation request

The appraisal typically costs $400–$600 — but if it saves $200+/month in PMI, the payback is just 2–3 months. Learn how to prepare for a home appraisal to maximize your value.

Requirements typically include:

• At least 20%–25% equity based on current appraised value
• Good payment history
• Generally 2+ years of ownership

Strategy 4: Refinance Into a Conventional Loan at 80%+ LTV

If your home has appreciated and you also want to lower your rate, refinancing can accomplish both goals simultaneously — and PMI simply won't exist on the new loan if you have 20%+ equity.

This strategy works when:

• Your home's current value puts you at 80%+ equity
• Current rates are lower than your existing rate, OR
• You're willing to accept a higher rate in exchange for eliminating PMI (sometimes the math still works)

The math example:

• Current loan: $280,000 at 7.50% with $150/month PMI
• Home worth $400,000 (70% LTV)
• New loan at 7.00%, no PMI
• Monthly savings: $114 (rate savings) + $150 (PMI) = $264/month

Even if refinancing costs $6,000, you break even in under 23 months — and then save $264/month indefinitely. Read more about [when to refinance your mortgage in 2026](/blog/when-to-refinance-mortgage-2026) to run the full numbers.

Caution: If your current rate is significantly lower than today's market rates, refinancing to eliminate PMI may cost you more in monthly interest than you save. Run the full comparison.

Strategy 5: Reach 20% Down Through a Lump-Sum Payment

If you received a windfall — an inheritance, bonus, or proceeds from selling another asset — making a lump-sum principal payment to hit 80% LTV is one of the cleanest ways to eliminate PMI immediately.

Example:

• Loan balance: $310,000
• Home value: $360,000
• 80% LTV target: $288,000
• Lump sum needed: $22,000

If you can scrape together that $22,000 (or whatever your specific gap is), you eliminate PMI and immediately free up $150–$300+/month going forward.

Consider using a HELOC on any other real estate you own to fund this paydown — then the HELOC interest may be tax-deductible. Explore [[HELOC for home improvement](/blog/heloc-for-home-gym-conversion) and equity strategies](/blog/heloc-for-home-improvement).

Special Case: FHA Loans and MIP Elimination

FHA loan borrowers face different rules. For FHA loans originated after June 2013:

• If you put down less than 10%, MIP is permanent for the life of the loan
• If you put down 10% or more, MIP lasts 11 years

The only way to eliminate FHA MIP in most cases is to refinance into a conventional loan. Once you have 20%+ equity (based on a current appraisal), you can refinance to a [conventional mortgage](/blog/conventional-loan-requirements) with no PMI.

This creates a compelling reason to refinance even if rates are similar — eliminating a perpetual MIP payment that could total $30,000–$50,000 over the loan's life.

Tracking Your Progress: Tools and Tips

Your mortgage servicer is required to send you an annual PMI disclosure showing your estimated cancellation date. But you shouldn't rely on this alone.

Track PMI elimination progress yourself:

1. Request an amortization schedule from your servicer showing the exact month your balance hits 80% LTV
2. Use a mortgage payoff calculator (available free at Bankrate) to model the impact of extra payments
3. Check your home's estimated value quarterly using Zillow, Redfin, and Realtor.com
4. When you believe you're eligible, act — don't wait for your servicer to notify you

Avoiding Common PMI Cancellation Mistakes

Mistake 1: Confusing original value with current value
For the standard HPA cancellation rights, LTV is calculated against the original purchase price, not current value. Know which standard your servicer is using.

Mistake 2: Missing the formal written request requirement
Verbal requests don't count. Always submit a written request via certified mail and keep a copy.

Mistake 3: Ignoring payment history requirements
If you've had any recent late payments, lenders can deny your cancellation request. Stay current for at least 12 months before requesting cancellation.

Mistake 4: Confusing PMI with [homeowners insurance](/blog/homeowners-insurance-complete-guide)
PMI protects your lender against default. Your homeowners insurance protects you against property damage. PMI cancellation does not affect your homeowners insurance.

Mistake 5: Forgetting about subordinate liens
If you have a HELOC or [second mortgage](/blog/best-heloc-lenders-2026), lenders may require a higher equity threshold (often 75% LTV combined) before canceling PMI on the first mortgage. Understand your full lien picture.

How Much Can You Save by Eliminating PMI Early?

The savings are substantial. At a typical PMI rate of 0.70% on a $400,000 loan:

• Annual PMI cost: $2,800
• Monthly PMI cost: $233

If you eliminate PMI 3 years early through aggressive paydown or an appraisal strategy, that's $8,400 in savings — enough to fund a home renovation, build an emergency fund, or accelerate a HELOC payoff.

Over the full mortgage life, many homeowners pay $15,000–$40,000 in PMI before it's canceled. Treating PMI elimination as a financial priority is one of the highest-return strategies available to homeowners.

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