Private Mortgage Insurance (PMI) is an added expense on conventional mortgages where the down payment is less than 20%. While it protects the lender if you default on the loan, PMI does not benefit you directly as the homeowner.
Most homeowners pay between $100-300 per month for PMI, which can add up to thousands of dollars over the life of your loan. Fortunately, you don't have to keep PMI forever. Once you've built up enough equity in your home, you're eligible to remove PMI and lower your monthly mortgage payment.
You can typically request PMI removal when:
By law, your lender must automatically remove PMI when your loan-to-value ratio reaches 78% of the original purchase price.
Determine your current loan balance relative to your home's original purchase price or appraised value. If your balance is 80% (or less) of the home's value, you're in the zone to request PMI removal.
Reach out to the company that handles your mortgage payments. Inform them you believe you qualify for PMI removal based on your equity level. They'll provide the forms or steps needed to officially start the process.
Many lenders need a formal written request (via email or mail) to remove PMI. Include your loan details, your reasons for cancellation, and any supporting documents your servicer requests.
Depending on your situation, you may need an appraisal to confirm the home's current market value. This ensures your LTV ratio indeed qualifies for PMI removal.
Generally, you'll need a solid payment history, no liens on your home, and be current on your mortgage. Requirements can vary by lender, so follow their instructions carefully.
Keep paying PMI until you receive official notice from your lender. Once approved, you'll see a decrease in your mortgage payment and can finally bid PMI goodbye.
By federal law, PMI automatically cancels when your loan-to-value reaches 78% of the home's original value (provided you're up to date on payments). However, you can request it even sooner once you're at 80% LTV.
Often, yes—especially if you've reached 80% LTV through home appreciation or extra payments. An appraisal confirms your home's current market value. If you're following the original amortization schedule, though, an appraisal may not be required.
No. PMI removal only applies to conventional loans. FHA loans have mortgage insurance (MIP) that has different rules, and VA loans require no ongoing mortgage insurance.
Usually about 30 days after submitting your request and completing any required appraisal. Keep making your mortgage payments (including PMI) until you receive official confirmation.
Contact us today to discuss your options and start the process: