80% loan-to-value
You can ask once your balance reaches 80% of original value. Some investors also accept a current-value review if your home has gained value, with rules on loan age, payment history, and appraisal.
How PMI works
Lenders usually require private mortgage insurance on a conventional loan when the down payment is under 20%. You pay the premium, and the lender gets the protection.
It protects the lender
PMI covers the lender if the loan defaults. It doesn't insure you or your home.
It's in your monthly payment
The premium is usually folded into your mortgage payment, so it's easy to miss.
Equity ends it
On a conventional loan, PMI can come off once you have enough equity.
How much does PMI cost?
PMI usually costs 0.5% to 1.5% of the original loan amount each year. On a $400,000 loan, that's about $167 to $500 a month.
Example: $195 a month in PMI
$2,340
a year back in your budget once it's removed
When can you cancel PMI?
There are two timelines. You can ask for removal, which often happens sooner, or wait for your servicer to end it automatically.
78% of original value
Servicers must end PMI when your scheduled balance reaches 78% of the home's original value, if you're current on payments. Today's value doesn't count here.
FHA vs. conventional loans
The Homeowners Protection Act
This federal law sets the disclosure, request, and automatic termination rules for conventional PMI. It's why original value matters so much, even when your home is worth more today.
What federal law requires
- Yearly PMI disclosures on covered conventional loans.
- The right to request cancellation at 80% of original value when conditions are met.
- Automatic termination at 78% of original value if you're current on payments.
Why people still overpay
- Servicers don't tell you when appreciation opens an earlier path.
- Statements show the payment due, not whether PMI is still needed.
- Automatic termination follows the original schedule, not today's value.