What is Private Mortgage Insurance (PMI) and why is it necessary?

Private Mortgage Insurance (PMI) is a type of insurance that protects the lender in case you default on your mortgage payments. It's typically required for conventional loans when you have a down payment of less than 20%. PMI helps the lender minimize the risk of loss if you're unable to repay the loan.

When can I remove PMI from my mortgage?

You can generally request to cancel PMI when your loan balance reaches 80% of the original property value, or when you reach the midpoint for a 30-year loan (15 years). However, the lender will need to verify that the property has enough equity and you have a good payment history.

What is the difference between PMI and FHA MIP?

While both are mortgage insurance, they apply to different types of loans. PMI is for conventional loans with less than 20% down, while FHA MIP is for Federal Housing Administration (FHA) loans which often require a smaller down payment. The main difference lies in the terms and cost structure.

How does automatic termination of PMI work?

Some lenders may automatically terminate PMI when your loan balance drops to 78% of the original property value, but this isn't universal. It's always best to check with your servicer about their specific policies.

What happens if I have late payments or a junior lien while requesting PMI removal?

Late payments can delay or prevent PMI cancellation, and junior liens may require you to keep PMI until the junior lien is paid off. It's important to maintain a good payment history and check with your servicer about any outstanding liens that could affect your PMI removal eligibility.

Can I remove PMI early?

In some cases, you might be able to remove PMI early if the property appreciates significantly or if you make major improvements, pay extra principal payments, or refinance the loan. However, these options are not guaranteed and depend on your lender's policies.

How do I request PMI removal?

To request PMI removal, gather necessary documents such as a current appraisal, payment history, and proof of any home improvements. Then, contact your servicer and submit a written request with details like your loan number, property address, current balance, lien status, and appraisal note. Follow the steps in our checklist for a successful PMI removal request.

mortgages

A Comprehensive Guide to Understanding and Removing Private

Justin Reynolds

August 23, 2026 3 min read

Private Mortgage Insurance (PMI) Home Loans Mortgage FHA Early Cancellation

Key Takeaways

Request removal of PMI once your LTV ratio reaches 80% or 78% for certain loans.
Understand the midpoint rule for 15-year loans on a 30-year schedule.
Discover ways to remove PMI early through home appreciation, major improvements, extra principal payments, and refinance.

PMI vs FHA MIP

Private Mortgage Insurance (PMI) and Federal Housing Administration (FHA) Mortgage Insurance Premiums (MIP) are both insurance policies that help protect lenders against borrower default. However, they have different requirements and terms.

80 Percent Cancellation

If your home's value increases or you pay down your mortgage balance, you may reach a point where you owe less than 80% of the original home value. At this point, you can typically request that your lender cancel your PMI.

78 Percent Termination

For certain types of loans, such as FHA loans, there's an option to terminate MIP once you reach a loan-to-value (LTV) ratio of 78%. This is different from cancelling PMI.

Midpoint Rule (15-Year Loans on a 30-Year Schedule)

If you have a 30-year mortgage but make payments as if it were a 15-year loan, you're following the midpoint rule. This can help you reach the point where you can request PMI removal earlier.

Am I Near 80% or 78%?

Educational estimate only — your servicer's own numbers (and, for cancellation requests, a real appraisal) are what actually count.

Original home value

Current loan principal

Extra monthly principal payment (optional)

Current LTV: 85.7%

You're still above 80% LTV. You owe about $20,000 more than the 80% cancellation threshold, and $27,000 more than the 78% automatic-termination threshold.

Early Removal

In some cases, homeowners may be able to remove their PMI early due to home appreciation, major improvements, extra principal payments, or refinancing.

How to Request Removal

To request the removal of your PMI, you'll need to contact your mortgage servicer. They will typically require documentation such as a home appraisal to determine if you meet the criteria for early removal.

Comparison Table

Rule trigger: Loan-to-value ratio
Who initiates it: Borrower
Documents needed: Appraisal, payment history
Appraisal need: Typically required
Effect of late payments or junior liens: Can delay or prevent PMI removal

Can You Remove PMI Early?

Yes, in certain circumstances, you can remove your PMI early. This can be achieved through home appreciation, major improvements, extra principal payments, or refinancing.

What to Send Your Servicer

Step by step checklist: Loan number, property address, current balance, lien status, appraisal note
Request template: Dear [Servicer], I am writing to request the removal of my PMI on loan number [number] for my property located at [address]. My current balance is [balance], and my lien status is [status]. I have included an appraisal note for your review.

FAQs

What is pmi: Private Mortgage Insurance protects lenders against borrower default.
When to request cancellation: When you reach a loan-to-value ratio of 80% or more, you can typically request PMI cancellation.
When termination is automatic: Termination is automatic for FHA loans when the LTV reaches 78%.
Midpoint rule: Following the midpoint rule on a 30-year mortgage can help you reach the point where you can request PMI removal earlier.
Early removal: Early removal of PMI is possible through home appreciation, major improvements, extra principal payments, or refinancing.
Fha mip: FHA Mortgage Insurance Premium (MIP) is a type of insurance that protects lenders against borrower default on FHA-backed loans.

Legal Compliance Caveat

Please note that the information provided here is for educational purposes only. Always check with your lender or agency for specific requirements and guidelines.

FAQ

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