Is PMI Automatically Removed From Your Mortgage?

Private Mortgage Insurance (PMI) protects lenders when a borrower puts down less than 20% on a home purchase. Many homeowners wonder if PMI eventually goes away on its own. Here’s what you need to know about automatic PMI removal and how you can take action to end these payments faster.

How Automatic PMI Cancellation Works

Federal law requires most conventional loans to cancel PMI once your loan balance falls to 78% of the home’s original value. Lenders track your progress and should remove the charge automatically when you reach this threshold, provided your payments are current.

When You Can Request Early Removal

You don’t have to wait for the 78% mark. At 80% loan‑to‑value (LTV), you can formally request cancellation. This often happens a few years earlier, especially if you’ve made extra payments or your home’s value has risen. Contact your servicer in writing to start the process.

Why Home Value Matters

A home that appreciates quickly could help you shed PMI sooner. If you believe your property value has increased significantly, consider ordering a new appraisal. A higher valuation can push your LTV below 80% and qualify you for early PMI termination.

The Impact of Timely Payments

Consistently paying on time is essential. Lenders usually require a good payment history before removing PMI, whether automatically or by request. Late payments could delay cancellation even if you meet the equity requirements.

Loans That Don’t Follow the Same Rules

Keep in mind that FHA loans and certain other government‑backed mortgages have different guidelines. Some forms of mortgage insurance remain for the life of the loan unless you refinance into a conventional mortgage.

Tips to Eliminate PMI Faster

1. Make Extra Principal Payments: Chipping away at your balance accelerates your path to 80% LTV.

2. Monitor Your Home’s Value: Watch market trends and consider a new appraisal if values rise.

3. Refinance: If rates have dropped and your equity has grown, refinancing into a new loan could remove PMI altogether.

Bottom Line

PMI doesn’t stick around forever. For most conventional loans, it falls off automatically when you reach 78% LTV, but you can request its removal at 80%. Staying on top of your payments, tracking your home’s value, and exploring refinancing options will help you get rid of PMI and lower your monthly expenses sooner.