PMI: What It Is—and How to Know When It Ends
Private Mortgage Insurance (PMI) is a monthly fee homeowners pay when their down payment is less than 20% of the home’s purchase price. It protects the lender—not you—if you default on the loan. While it can make homeownership more accessible, most people are eager to drop PMI as soon as possible.
So, when can you stop paying it?
In most cases, PMI automatically ends once your loan balance reaches 78% of the home’s original value—meaning you’ve built up 22% equity. However, you don’t have to wait for the automatic removal.
You can request PMI cancellation early once your equity reaches 20%—typically through a combination of regular payments and rising home values. To do this, you’ll usually need:
- A good payment history
- No other liens on the property
- Proof (like an appraisal) that your home hasn’t lost value
If you’ve made extra payments or your home has appreciated significantly, you may already qualify. In that case, reach out to your mortgage servicer—the company you send payments to—and ask about their PMI cancellation process. They’ll guide you through next steps, which may include ordering an appraisal at your expense.
In short: PMI isn’t forever. And if your financial situation has improved, you may be closer to canceling it than you think. A quick call to your loan servicer could save you hundreds—even thousands—each year.
If you have any questions about your home loan, our team would be happy to help answer them! We’re a no-pressure, family team who loves supporting people on both their home-buying and home-ownership journeys. Just give us a call or fill out a form. We’re here to chat.
