PMI removal: the 80% request, the 78% automatic cancellation, and the appraisal route

Private mortgage insurance is temporary by law — but the servicer will not volunteer the earliest exit. You have to ask, in writing, at the right moment.

Three ways out

1. Borrower request at 80% LTV

Under the Homeowners Protection Act you may ask for cancellation when your balance reaches 80% of the original value — the lower of the purchase price or the appraised value at origination. Requirements: a written request, a good payment history (no 30-day late in the past 12 months, no 60-day late in the past 24), no junior liens, and the servicer may require evidence that the value has not declined (sometimes a broker price opinion or appraisal at your cost). You can reach 80% early by making extra principal payments; the date is on your original amortization schedule.

2. Automatic cancellation at 78% LTV

The servicer must cancel PMI on the date the balance is scheduled to reach 78% of original value, provided you are current. No request needed. If you are behind, it cancels once you catch up. A final backstop: PMI must end at the midpoint of the loan term (month 180 of a 30-year loan) regardless of LTV.

3. Cancellation based on current value

Not a federal right, but a standard Fannie Mae and Freddie Mac policy: after two years of payments, you may request cancellation if a new appraisal shows 75% LTV or lower; after five years, 80% LTV or lower. Substantial improvements can shorten the two-year wait. You pay for the appraisal (roughly $400 to $700), which often pays for itself in a few months of PMI.

What to send

A short letter or the servicer’s form: your loan number, a statement that you request PMI cancellation under the Homeowners Protection Act (or under the investor’s current-value policy), and the basis (scheduled 80% LTV, or a request for the appraisal procedure). Send it to the servicer’s correspondence address and keep a copy. The servicer must respond; if it refuses, ask for the reason in writing and escalate with a CFPB complaint.

The FHA exception

FHA mortgage insurance premiums follow different rules: for loans originated since June 2013 with less than 10% down, MIP lasts the life of the loan; with 10% or more down, it ends after 11 years. The only exit is refinancing into a conventional loan once you have 20% equity.

Frequently asked questions

Does my servicer have to tell me when I can cancel?

Yes. The law requires an initial disclosure at closing and an annual reminder of your cancellation rights, plus notice when PMI is automatically cancelled.

Can I cancel PMI on an investment property?

The federal act covers single-family primary residences. Investor guidelines typically allow cancellation on second homes and investment properties with a lower LTV threshold (often 70% to 75%) on request.

What if my home value dropped?

The 80% request can be denied if the servicer shows the value declined below original; the 78% automatic cancellation still applies based on original value and the payment schedule.