Private Mortgage Insurance, or PMI, is the insurance you pay on low down payment mortgages.  It protects lenders and investors from defaults on a mortgage loan.

Typically, you have to have mortgage insurance if you have a down payment of less than 20% of your home’s purchase price.  Qualifying for low down payment loans can look great up front, but they can be more expensive over the long run, because of the required insurance.  You can easily spend over a thousand a year on PMI alone.

So how do you get rid of your Mortgage Insurance?

Pay Down Your Mortgage.  The most straightforward way to get rid of PMI is to pay your mortgage down to below the original 80% of your home’s value.  You can then request to have your PMI removed, so long as you have good payment history.  You can see details here, but requirements from the Consumer Financial Protection Bureau include:

  • Your request to cancel PMI must be in writing.
  • You must have a good payment history and be current on your payments.
  • Your lender may require you to certify that there are no junior liens (such as a second mortgage) on your home.

The CFPB also notes that your lender can request an appraisal of the home to make sure that the value hasn’t decreased below the original value, so be aware that there are factors that spring up.  But unless something has changed in the value of your home, getting below 80% of the appraised value of your home is a good sign you can get rid of your PMI. To check whether your loan balance is below 80%, just divide your current loan balance by the original appraised value of your home.

Refinance.   Mortgage rates are still incredibly low. Refinancing can allow you to get a better rate.  It can also help you lose your PMI if your loan-to-value ratio has changed and puts you under the 80% that requires you to have insurance.  Keep in mind though that many loans require you to wait 2 years before you can refinance.

Get an Appraisal.  If you’ve done some remodeling or believe your home’s market value has increased, getting an appraisal and asking your lender to recalculate your loan-to-value ratio can put you below the 80% you need to cancel PMI.  Check with your lender on whether they will consider a new appraisal instead of the original purchase price of your home beforehand.

If you have any questions about mortgage, your PMI, or anything in between, give us a call!  We’re a family company with mortgage experts and Christian values.  And it makes our day when we get to help you and your family get your dream home – within your budget.

Much love,


The Christian Mortgage Mom