Own Luxury Homes®
What Is PMI and How to Get Rid of It? 2026 Guide
PMI: required on conventional loans below 20% down; costs 0.5–1.5% of loan/year ($131–394/mo on $315K); protects lender, not you. 5 removal methods: automatic at 78% LTV (federal law); request at 80% LTV; pay down principal faster; new appraisal if value rose; refinance. Critical: lender must order the appraisal — never order your own. FHA MIP differs: under 10% down lasts life of loan; remove by refinancing to conventional. Own Luxury Homes® 12-Point Agent Integrity Audit™ — PMI removal guidance.
What Is PMI and How Do You Get Rid of It? The Complete Guide to Canceling Private Mortgage Insurance
The direct answer: PMI (private mortgage insurance) is required on conventional loans when you put down less than 20%. It protects the lender, not you, and adds $50–400+/month. You can get rid of it five ways: wait for automatic termination at 78% LTV (required by federal law), request cancellation at 80% LTV, pay down the principal faster, get a new appraisal if your home value rose, or refinance. FHA mortgage insurance (MIP) is different — it usually requires refinancing into a conventional loan to remove.
The 5 Ways to Get Rid of PMI
| Method | When It Works | What You Do | Cost | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Automatic termination | Balance hits 78% of original value (or loan midpoint) | Nothing — lender must cancel by law; keep payments current | $0 | ||||||
| Request cancellation at 80% LTV | Balance hits 80% of original value | Written request to servicer; good payment history required; may need appraisal | $0–550 (appraisal if required) | ||||||
| Pay down principal faster | You want to reach 80% sooner | Make extra principal payments; recalculate LTV; request cancellation early | Cost of extra payments | ||||||
| New appraisal (rising value) | Home value rose; owned 2+ years (75% LTV) or 5+ years (80% LTV) | Lender orders appraisal; if value supports it, PMI cancels | $350–550 appraisal | ||||||
| Refinance | New loan balance under 80% of current value | Refinance into new loan without PMI | 2–3% of loan in closing costs | ||||||
| FHA loans carry MIP (mortgage insurance premium), not PMI. For FHA loans originated after June 2013 with under 10% down, MIP lasts the life of the loan — the only way to remove it is typically to refinance into a conventional loan once you have 20% equity. | |||||||||
The Appraisal Rule That Trips Up Homeowners
When canceling PMI based on rising home value: you must NOT order your own appraisal. The mortgage servicer is required to order and validate the appraisal through their own approved sources. If you hire your own appraiser, that valuation will not be accepted, and you’ll have to pay for the servicer’s appraisal anyway. Always contact your servicer first, ask their specific process and valuation requirements, and let them initiate the appraisal. Some servicers accept a broker price opinion (BPO) or automated valuation — cheaper than a full appraisal — so ask before assuming you need to pay $400+.
When Removing PMI Is and Isn’t Worth the Effort
Worth it: if you’re paying $200+/month in PMI and a $400 appraisal can remove it, you break even in two months — clear win. Not worth it (yet): if you’re only a few months from automatic 78% termination, paying $400 for an appraisal to cancel slightly sooner may cost more than it saves. Do the math: monthly PMI × months saved vs the appraisal cost. If the home value rose significantly, the early-cancellation savings usually justify the appraisal.
“"I’ve been paying PMI for three years and my neighborhood values jumped. Can I get rid of it?" Very possibly. Here’s the path: you’ve owned 3 years, so under Fannie/Freddie rules you can cancel at 75% LTV based on current value. If your neighborhood appreciated meaningfully, you may already be there. Step one: call your servicer. Ask: "What’s your process to cancel PMI based on current home value? Do you require a full appraisal or do you accept a BPO?" Let them order the valuation — never order your own. If you’re paying $230/month in PMI and a $400 appraisal removes it: you save $2,760 a year for a one-time $400 cost. That’s one of the best returns available to a homeowner. Make the call this week.”
— Ryan Brown, Principal Broker & CEO, Own Luxury Homes®
How do I get rid of PMI on my mortgage?
Five ways: (1) Automatic termination — federal law requires lenders to cancel PMI at 78% LTV (or the loan’s midpoint), no action needed if you’re current. (2) Request cancellation at 80% LTV — written request to your servicer; requires good payment history; sometimes an appraisal. (3) Pay down principal faster to reach 80% sooner. (4) New appraisal if your home value rose — cancel at 75% LTV (owned 2+ years) or 80% LTV (owned 5+ years); the lender must order the appraisal, not you. (5) Refinance into a new loan with no PMI. PMI costs 0.5–1.5% of the loan per year ($131–394/month on a $315K loan). Note: FHA MIP is different — with under 10% down it lasts the life of the loan; removing it usually requires refinancing into a conventional loan.
Own Luxury Homes® — PMI removal guidance for homeowner clients. 12-Point Agent Integrity Audit™. Get a PMI removal consultation ›
"The introduction Own Luxury Homes® makes is to a specialist with documented closing history in your specific market — not the county, not the metro, the submarket you're actually selling or buying in. That's the standard we verify before your name goes anywhere."
— Ryan Brown, Principal Broker & CEO, Own Luxury Homes® (FL License BK3626873)