Private mortgage insurance protects the lender, not you, and if you put less than 20% down on a conventional loan, you're almost certainly paying it. PMI typically costs 0.3% to 1.5% of the loan amount per year, which adds up fast, but it doesn't have to stay forever.
Both thresholds are measured against the home's original value.
1. Automatic termination. Under federal law, your lender must cancel PMI automatically when your loan balance reaches 78% of the original purchase price, as long as you're current on payments.
2. Request cancellation at 80% LTV. You don't have to wait for the automatic trigger. Once your balance reaches 80% of the original value, you can submit a written request. Your lender may require a current home appraisal.
3. Refinance. If your home has appreciated significantly, a refinance at the new, higher value may push you below 80% LTV and eliminate PMI, sometimes while also lowering your rate.
For many homeowners, dropping PMI quietly returns $100 to $300 per month to the household budget.
Dropping PMI is one of the most straightforward wins in homeownership.
Often all it takes is asking. Check where your balance sits against the 80% and 78% marks, then send the request.
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The year before you apply for a mortgage shapes your rate and approval odds. Follow this 12-month prep timeline for first-time home buyers.
A loan officer can check where your balance stands and whether requesting cancellation or refinancing gets you there sooner. Pre-qualifying will not affect your credit score.
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