Mortgage insurance
The month your PMI can end
Two dates are fixed by law on the day you sign, and a third is available whenever your property has appreciated. Most borrowers never find out any of them.
The two dates already printed on your schedule
One is the month you may ask. The other is the month the servicer must act whether you ask or not. On a typical file they are over a year apart.
- You may request cancellation at 80%May 2034Month 91 · 7 years 7 months
- Automatic termination at 78%July 2035Month 105 · 8 years 9 months
- Earliest on a current appraisal at 75% LTVAugust 2030Month 46 ยท 3 years 10 months
- Estimated PMI premium, monthly
- $165
- Cost of waiting for automatic termination
- $2,310
- Total PMI paid to the 78% date
- $17,325
Sample premium. PMI is priced by credit score and loan-to-value and is illustrated here at 0.55% of the loan per year. FHA loans do not follow these rules at all; see the note below.
The five rules that govern it
Borrower-requested cancellation at 80%
Under the Homeowners Protection Act you may request cancellation in writing once the balance reaches 80% of the original value. You must be current, have no second lien in some cases, and the servicer may require a broker price opinion at your cost.
Automatic termination at 78%
The servicer must terminate PMI automatically when the balance reaches 78% of the original value based on the original amortization schedule, whether or not you ask, provided you are current on payments.
Final termination at the midpoint
If neither threshold has been reached, PMI ends at the midpoint of the amortization period. On a 30-year loan that is month 180. This matters on loans with a modification or a payment history that slowed principal.
Early removal on current value
Separate from the Act, Fannie Mae permits cancellation based on a current appraisal at 75% loan-to-value after two years, or 80% after five years. In a market that has appreciated, this is usually years earlier than the schedule.
FHA is different
FHA annual mortgage insurance is not cancellable at 78% when the loan started above 90% loan-to-value. It runs for the life of the loan. The exit is a conventional refinance at 80% loan-to-value, not a phone call to the servicer.
The request, in four steps
- 1
Confirm the date
Use the calculator above, or read the amortization schedule you received at closing. You need the month your balance reaches 80% of the original purchase price or appraised value, whichever was lower.
- 2
Write to the servicer
In writing, not by phone. State the loan number, the original value, the current balance and that you are requesting cancellation under the Homeowners Protection Act.
- 3
Expect a value condition
The servicer will usually require evidence that value has not declined. That is a broker price opinion or an appraisal, ordered by them and paid for by you, typically $150 to $500.
- 4
Check the next statement
Cancellation takes effect on a payment date, not immediately. If the premium is still there two statements later, write again and reference the date of your original request.
Not legal advice. The Homeowners Protection Act sets the framework; servicer procedures vary. Figures on this page are samples for a demonstration site.
What borrowers ask about PMI
We hand every borrower who takes mortgage insurance a dated schedule at closing with both thresholds marked. It is the most useful piece of paper in the folder.
Check the refinance routeBoth exist. You may request cancellation in writing at 80% of the original value, and the servicer must terminate automatically at 78% based on the original amortization schedule. On a typical file those dates are fourteen months apart, so asking is worth real money.
It can require conditions: that you are current, that your payment history is good, that there is no subordinate lien in some cases, and that the current value has not declined. The last one usually means a broker price opinion at your cost, typically $150 to $300.
Then the faster route is Fannie Mae's current-value rule: 75% loan-to-value after two years of seasoning, or 80% after five. In an appreciating market this is usually years earlier than the original schedule. You must ask and you must pay for the appraisal.
Because FHA's annual premium is not cancellable when the loan started above 90% loan-to-value. It runs for the full term. The only exit is a conventional refinance once you reach 80% loan-to-value on a current appraisal.
Substantially. An extra $200 a month on a $360,000 loan at 6.125% pulls the 80% date forward by roughly 21 months and the 78% date by 25 months. Enter it in the extra principal field above and both dates move.
On FHA and past 80% loan-to-value?
A conventional refinance ends mortgage insurance that FHA would otherwise charge for the whole term. We will run the break-even before you commit to anything.
No application fee. Soft credit pull at pre-qualification. Flat $1,095 origination at closing.