PMI cancellation on a conforming loan: 80% request, 78% automatic and the midpoint rule

On a conforming loan you may ask to cancel PMI at 80% of the original value, it terminates automatically at 78% on the amortization schedule, and it must end at the loan’s midpoint regardless; GSE servicing rules add current-value paths.

Three dates written into your loan at closing

The initial PMI disclosure you receive at consummation on a conforming loan lists the date the loan is scheduled to reach 80% LTV (your cancellation request date) and 78% (automatic termination), both computed from the original amortization schedule and the original value — the lower of sales price or appraisal. It also implies a third date: the midpoint of the term, month 180 of a 30-year loan, when PMI must end if you are current even if the balance never reached 78% because of a payment plan or deferral. Move-up buyers with 10% down typically reach 80% on schedule in year five or six at today’s rates; that is the date to put in a calendar.

Making the request stick

A borrower-requested cancellation needs a written request, a good payment history (no 30-day late in the prior 12 months, no 60-day late in the prior 24), no subordinate lien, and evidence that the value has not fallen below the original value, for which the servicer may require an appraisal at your cost. The automatic termination at 78% requires only that you be current; if you are delinquent on that date, it happens on the first day after you catch up. The servicer cannot add conditions beyond these for a loan that was not designated high-risk at origination.

Where Fannie Mae and Freddie Mac go further than the Act

Because home prices on a move-up purchase often rise faster than the balance falls, the GSE servicing guides allow cancellation based on current value: generally 75% LTV if the loan is between two and five years old, 80% after five years, and earlier when substantial improvements justify a new appraisal or broker price opinion. The statute does not require this; the investor does. Ask the servicer which path it is applying and whether a refinance would reset the clock — it does, since a new loan gets new original value and schedule. Prepaying principal to reach 80% early works under the Act for the request date, but not for automatic termination, which stays on the schedule.

Lender-paid and single-premium PMI are outside the rule

If you chose lender-paid PMI at closing, the higher rate never goes away; the Act only requires a disclosure that LPMI cannot be cancelled. A single premium financed into the loan is refundable only if the policy was written as refundable. For a repeat buyer planning to sell or refinance within five years those products can still be cheaper; for a long hold, borrower-paid monthly PMI that cancels is usually the better bet.

What to check

• Keep the initial PMI disclosure: it states the 80% and 78% dates from the original amortization schedule.
• Send the cancellation request in writing once the balance hits 80% of original value; expect an appraisal condition.
• Ask the servicer about the GSE current-value path (75% LTV after two years, 80% after five) if prices have risen.
• Prepayments move the request date but not the automatic termination date; a refinance resets both.
• Lender-paid PMI never cancels — weigh it only for a short expected holding period.

Frequently asked questions

Our home appreciated a lot — can we drop PMI on our conventional loan before the scheduled date?

Often, through the servicer’s investor rules rather than the statute. Fannie Mae and Freddie Mac servicing policies generally permit cancellation at 75% current LTV after two years or 80% after five, supported by an appraisal or BPO you pay for, provided payments are current. The Homeowners Protection Act itself measures against original value, so ask the servicer which standard it is using.

I made a large principal payment — does PMI end automatically now?

Not automatically. The 78% termination date follows the original amortization schedule, not the actual balance. A prepayment that brings the loan to 80% of original value gives you the right to request cancellation immediately, in writing, subject to the payment-history and no-decline-in-value conditions. The servicer then has to cancel or explain why not.

The rule in full: Homeowners Protection Act (PMI cancellation). The borrower profile: Conventional loan borrowers. Related guides: Conventional loan requirements: credit, down payment, DTI, reserves, property · Conforming loan limits: how the FHFA number works and what happens above it · PMI removal: the 80% request, the 78% automatic cancellation, and the appraisal route · PMI for first-time buyers: what it costs and how to get rid of it.

Other federal rules for conventional loan borrowers

TILA / Reg Z · RESPA · TRID disclosures · ECOA · Fair Housing Act · HMDA · SAFE Act / NMLS · ATR / QM · HOEPA · Servicing rules · FCRA · Flood insurance · MARS rule · SCRA · LO compensation

HPA / PMI for other borrowers

First-time buyers · Veterans · Self-employed · Investors · Retirees · Bad credit · Foreign nationals · Physicians · Heroes · Rural buyers · Condo & second home · Refinancing