Mortgage guide · 2026

How to Remove PMI in 2026

Private mortgage insurance costs most borrowers $100 to $300 per month on a conventional loan with less than 20% down. The Homeowners Protection Act gives you a legal right to cancel it at 80% loan-to-value and requires automatic termination at 78%. This guide covers both paths, the exact paperwork, and when removing PMI is not worth the cost.

By Josimar Nascimento, Founder · Published October 15, 2026 · 10-minute read

The 80% Rule: Your Legal Right to Request Cancellation

The Homeowners Protection Act of 1998 (HPA), codified at 12 U.S.C. § 4901, gives every borrower on a conventional loan the right to request PMI cancellation once the loan-to-value ratio reaches 80% based on the original purchase price. This is a statutory entitlement, not a servicer policy. It cannot be overridden by contract language in the note.

The distinction between 80% and 78% matters. At 80% LTV, cancellation is borrower-initiated. The servicer does not have to act until you make a written request. At 78% LTV, cancellation is automatic: the servicer must terminate PMI whether you ask or not. That two-percentage-point gap typically costs a borrower 12 to 18 extra months of premiums if they wait for automatic termination instead of requesting at 80%.

To qualify, the request must meet four statutory conditions: the loan must be current (no payment 30 days late within the last 12 months or 60 days late within the last 24 months), there are no junior liens on the property (or the junior lien holder agrees to a subordination), the servicer has not already terminated PMI, and the borrower provides a written request with supporting documentation.

The servicer must acknowledge the request within 30 days of receipt and provide a written decision. If denied, they must state the specific reason. If granted, cancellation typically takes effect on the next billing cycle.

How to Request Cancellation in Writing

The written request is the trigger that starts the statutory clock. A phone call does not count, and neither does an online form submission unless it produces a dated written record. Send the request by certified mail or through a servicer portal that issues a timestamped confirmation.

The letter should include: the loan number, the property address, the original purchase price, the original appraised value (if different from the purchase price), the original loan amount, the current principal balance, a statement that you are current on payments, and a request for PMI cancellation under the Homeowners Protection Act. Attach a recent statement showing the current balance and 12 months of payment history.

Some servicers respond with a required form rather than accepting a free-form letter. If they send a form, complete it and return it by the deadline in the cover letter. Others will accept a written request outright and confirm the cancellation effective date. In either case, keep a copy of everything you send and the date it was received.

If the servicer misses the 30-day acknowledgment, or if they deny the request without a specific statutory reason, you can file a complaint with the Consumer Financial Protection Bureau. The CFPB forwards servicer complaints for investigation and publishes resolved complaint outcomes in their public database.

The Appraisal-Based Removal Path

If home values in your market have risen since purchase, appraisal-based removal can eliminate PMI earlier than the amortization schedule allows. Instead of waiting for the loan balance to fall to 80% of the original price, you use the current market value to calculate LTV, which is typically lower.

Example: you bought a home for $400,000 with 10% down and a $360,000 loan. At the original value, you need the balance to fall to $320,000 (80% of $400,000) before requesting cancellation, which on a 30-year schedule takes about 6 years. If the market value has risen to $450,000, the 80% threshold against current value is $360,000, which you already meet. The difference is 6 years of PMI premiums at $150 to $250 per month.

Most servicers require a two-year waiting period before accepting an appraisal-based request, though Fannie Mae's Servicing Guide (B-1.1-04) allows 12 months in cases with documented property improvements. The appraisal runs $400 to $700, paid by the borrower. If the resulting value does not support removal, the fee is not refundable.

Some servicers accept a Broker Price Opinion (BPO, $75 to $200) or an Automated Valuation Model (AVM, often free) instead of a full appraisal when the equity cushion is large. Ask the servicer which valuation method they accept before ordering a full appraisal.

Automatic Termination at 78% LTV

The HPA requires servicers to automatically terminate PMI when the loan balance reaches 78% of the original value, based on the scheduled amortization. This termination happens without a borrower request and without an appraisal. It is measured against the original value, not current market value.

The timeline depends on your original down payment and the amortization schedule. On a 30-year fixed at 7%:

5% down (95% LTV): automatic termination in year 10 or 11
10% down (90% LTV): automatic termination in year 7 or 8
15% down (85% LTV): automatic termination in year 4 or 5

Extra principal payments shorten these timelines proportionally. Every additional $1,000 in principal reduces the LTV by roughly 0.25 percentage points on a $400,000 home, and the cumulative effect on a 5% down loan can pull automatic termination forward by 2 to 3 years.

Run your own numbers with the PMI calculator and the LTV calculator to see when your loan will hit the 80% and 78% thresholds.

When PMI Removal Does Not Make Sense

PMI removal is almost always a good financial decision, because it reduces monthly cost with no downside. But three scenarios require a different calculation.

When an appraisal is required and borderline. If your current LTV is close to 80% against current value but the market has been flat or declining, paying $500 for an appraisal that comes back below the threshold wastes the fee. Wait for the amortization-based 80% threshold instead, which does not require an appraisal.

When you plan to refinance within 12 months. Refinancing replaces the loan and typically resets the PMI calculation. If you are refinancing soon for a lower rate, the PMI line will drop off or change with the new loan rather than through a cancellation request on the current one. Wait for the refinance close instead of paying for an appraisal now.

When your loan is FHA, not conventional. FHA loans carry a Mortgage Insurance Premium (MIP), not PMI, and the cancellation rules are different. FHA MIP on loans with less than 10% down lasts for the life of the loan. The only way to eliminate it is to refinance into a conventional loan with at least 20% equity. The Homeowners Protection Act does not apply to FHA loans.

If you are not sure whether your loan is conventional with PMI or FHA with MIP, check your most recent mortgage statement. Both appear as an escrow line item, but the disclosure labels are different. You can also check the Loan Estimate or Closing Disclosure from your original closing.

How Much You Save

The savings depend on your PMI rate and remaining balance. Urban Institute data puts the average annual PMI rate at 0.46% for borrowers with 760+ credit scores, up to 1.50% for scores in the 620 to 639 range. On a $360,000 loan at 0.55%, PMI costs $165 per month, or $1,980 per year.

Requesting cancellation at 80% LTV instead of waiting for automatic termination at 78% typically saves 12 to 18 months of premiums. On a $165-per-month PMI rate, that is $2,000 to $3,000 in avoided cost. If appraisal-based removal pulls the timeline forward an additional 2 to 4 years, the cumulative savings reach $6,000 to $10,000.

The cash freed up from PMI removal can be redirected to principal payments, which accelerates the equity-building cycle further. Use the home equity calculator to model how faster principal paydown affects your position.

Frequently asked questions

Can I remove PMI at 20% equity?

Yes. Under the Homeowners Protection Act of 1998, you have the legal right to request PMI cancellation in writing once your loan-to-value ratio reaches 80% based on the original purchase price. The servicer must respond within 30 days, and if the request meets the statutory conditions (current on payments, no junior liens, good payment history), cancellation must be granted.

How much does an appraisal cost for PMI removal?

A standard single-family appraisal runs $400 to $700 depending on the market and property type. Some servicers accept a Broker Price Opinion (BPO) or Automated Valuation Model (AVM) for lower-value determinations, which costs $75 to $200. The borrower typically pays the appraisal fee upfront, and it is not refundable if the appraisal does not support removal.

Can I remove PMI without an appraisal?

Yes, if the removal is based on the original amortization schedule rather than current market value. Automatic termination at 78% LTV uses the original value and the scheduled balance, so no appraisal is required. Borrower-requested cancellation at 80% LTV may or may not require an appraisal depending on the servicer and the loan type.

What if my home value went down?

If current market value is below the original purchase price, appraisal-based removal is not possible. Automatic termination at 78% LTV of the original value still applies on schedule, regardless of current market value. Some servicers also accept a written request at 80% of original value even if the home declined, since the HPA entitlement is based on the original value, not the current one.

Does PMI removal require refinancing?

No. PMI cancellation on a conventional loan removes the monthly insurance premium without changing the loan terms, rate, or servicer. Refinancing is a separate transaction that replaces the existing loan entirely and carries its own closing costs. The two are unrelated unless the borrower wants a lower rate at the same time as PMI removal.

How long does PMI removal take?

Once the servicer receives a complete written request with supporting documentation, cancellation typically takes 30 to 45 days. If an appraisal is required, add 2 to 3 weeks. Servicers must acknowledge the request within 30 days and either grant it or provide a written explanation for denial.

Sources

Homeowners Protection Act of 1998, 12 U.S.C. § 4901 et seq.
Consumer Financial Protection Bureau. "When can I remove private mortgage insurance (PMI) from my loan?"
Fannie Mae. Servicing Guide, B-1.1-04: "Removal of Borrower-Purchased Mortgage Insurance."
Urban Institute, Housing Finance Policy Center. "Housing Finance at a Glance: A Monthly Chartbook," June 2026.
Freddie Mac. "Mortgage Insurance Premiums and Cancellation Rules."
Consumer Financial Protection Bureau. Consumer Complaint Database. Public complaint resolution records.

Bottom line: you have a legal right to remove PMI at 80% LTV, and the servicer must remove it automatically at 78%. The two paths use different numbers, and one of them (appraisal-based) can pull the timeline forward by years if your market has appreciated. Run the PMI calculator first to see your exact savings, then decide whether a written request at 80% or an appraisal-based request is the faster route.