How to Get Rid of PMI

Are you ready to get rid of PMI? Private mortgage insurance can add hundreds of dollars to a mortgage payment. Here’s how to remove PMI payments.

get rid of PMI

There are various ways to get rid of PMI, a.k.a., private mortgage insurance. A reader posted this question on Facebook:

“Anyone have experience with getting a new appraisal done in order to remove PMI? We bought our house in 2012, have 87% LTV at the purchase price. I THINK the value has gone up enough that we’re actually at 75%, but not sure. Any suggestions on ensuring that we are there before I spend the money on the appraisal? I’m cool with accelerating a few home projects to ensure it but not sure that those would do it. Removing PMI would cost ~$450 for the appraisal but would save me about $9k from now until it drops off automatically.

The writer of the Facebook question is pointing toward one of several possibilities for getting rid of PMI. But before we get into that, what is PMI?

What is PMI and How Does it Work?

PMI is is a form of insurance that mortgage lenders use to reduce the risk of loss on low down payment mortgages. Lenders typically require it on mortgages for more than 80% of a home’s value. Basically, PMI will get the bank some of its money back if you default on your loan. PMI doesn’t cover the entire value of the mortgage, of course. If you default and go into foreclosure, the sale of the home covers a portion of the bank’s losses. But PMI can make up for the rest.

As an example, if a buyer puts 5% down on a home, the lender will require a level of PMI that reduces that mortgage to something less than 80% of the home’s value. On a 95% mortgage, the lender will typically require “30% coverage.” That will reduce the lender’s exposure on the property from 95% down to around 68% (95% less [95% X 30%]).

How Much Does PMI Cost?

PMI means lenders are more likely to offer low down payment, high-ratio mortgage loans. That’s good news if you need to buy a home with anything less than 20% down.

But PMI is also expensive. For instance, we’ll use this calculator to run one example number. On a $190,000 mortgage at 3.9% with a home value of $200,000, a borrower with fair credit could expect to pay $138 per month in PMI.

That’s $1,656 per year!

Clearly, the more quickly you can make that payment go away, the better.

Ways to Get Rid of PMI

On most loans, you actually have to have the ability, as the buyer, to get rid of PMI. This right came as a result of the Homeowner’s Protection Act which was passed into law back in 1998. However, these rules don’t apply to all mortgages, including those backed by the Federal Housing Administration (FHA). Don’t worry, though. You can still get rid of PMI on an FHA loan. It’s just a bit more complicated. We’ll talk about that in a bit.

You can get rid of PMI in one of several ways. The Facebook question-writer asks about just one of the ways to remove PMI. This option is using an appraisal to show that the mortgage is now worth 80% or less of the home’s current value.

But before we get into the specifics of how to determine the current value of your home before spending the money for an appraisal, let’s review the different ways that you can have PMI removed from your mortgage.

Pay Down Your Mortgage

One way to get rid of PMI is to simply take the purchase price of the home and multiply it by 80%. Then pay your mortgage down to that amount. So if you paid $250,000 for the home, 80% of that value is $200,000. Once you pay the loan down to $200,000, you can have the PMI removed.

According to the Consumer Financial Protection Bureau (CFPB), you must also meet the following conditions in order to have your PMI removed:

  • Your request 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.
  • Your lender can also require you to provide evidence (for example, an appraisal) that the value of your property has not declined below the value of the home when you first bought it. If the value of your home has decreased, you may not be able to cancel PMI.

Because of that last provision, you may want to check property values in your area before applying to have PMI removed. If they’ve taken a downturn since you purchased your home, the lender may require an appraisal. Often, this is worth your while and the cost. But it’s best to be prepared.

Pay the Mortgage Down to 78% of the Purchase Price

Because of the Homeowners Protection Act, PMI now has a default setting This is a level at which it a lender must cancel it automatically. The mortgage servicer is required to drop your PMI coverage when the outstanding balance of your mortgage drops to 78% of the original value of your home.

If the original purchase price on the house was $200,000, your lender must cancel PMI when your outstanding loan amount drops to $156,000. This is 78% of $200,000.

This should happen even if you do nothing in an attempt to remove the PMI. You must, however, be current on your mortgage at the time this happens. Otherwise the  lender is not required to remove the coverage.

Pay the Mortgage Down to the Midpoint of the Term

This is another automatic PMI elimination process. Even if the amount of the outstanding mortgage does not fall to the 78% level, the lender is still required to remove PMI when at least half of the mortgage term has elapsed. On a 30-year mortgage, for example, PMI must be removed 15 years into the loan. This is true even if the mortgage balance exceeds 78% of the original purchase price of the house.

Typically, the mortgage balance is paid to something less than 78% before the halfway mark, at least on self-amortizing loans. However, if you have an alternative mortgage, such as a balloon type, or an interest-only loan, you may not reach 78% even halfway through the term. But the lender still required to automatically remove the PMI. Again, though, this will only occur automatically if you are up-to-date on your mortgage payments.

Refinance the Mortgage

If you are planning to refinance your mortgage to take advantage of a lower interest rate, you may be able to have PMI removed. This will work if your new mortgage is for 80% or less of the home’s current appraised value.

You’ll most likely need an appraisal to refinance your mortgage, anyway. However, you’ll use the appraisal as the basis of your new mortgage, instead of just for eliminating PMI. It’s kind of a two-birds-one-stone situation. But it will only work if refinancing makes sense in the first place. And, of course, you’ll need to be sure your new mortgage is for 80% or less of the home’s current value.

Refinancing is the only option for getting rid of PMI on most government-backed loans, such as FHA loans. You’ll have to refinance from a government-backed loan to a conventional mortgage to get rid of PMI. And the rule for the new mortgage’s value compared to your home’s value still holds true.

Prove that the Value of Your Home Has Risen

The final option for having your PMI canceled is to prove that the outstanding balance on your mortgage is 80% or less of the current value of your home. This can happen because of increasing property values, rather than because you paid your mortgage down.

However, you’ll have to put in some work here. First, you may want to get a feel for property values. Talk to a local realtor or do some digging online to see if your hunch about increased property values is correct.

Then, contact your mortgage lender to get the appropriate paperwork for removing the PMI. Be sure you’re following a checklist of lender requirements as you complete the process.

With this option, you’ll definitely have to get an appraisal that proves your property is now worth more. Check with the lender about what must be included in the appraisal before having one done. And be prepared to shell out a few hundred bucks to the professional appraiser.

Also, double-check with your lender if you’ve bought your home within the past two years. Some lenders require at least two years’ worth of on-time payments before they’ll remove PMI. Don’t pay for an appraisal before you confirm your lender’s requirements.

Check if Property Values Have Increased

As I said, it’s a good idea to check property values before you order an appraisal. You can do this in a few different ways. Here are some options to try:

What if you can demonstrate that the value of the property is sufficient to lower the mortgage value to 80% or less of the home’s current value, and the lender refuses to cooperate? Then file a complaint online with the Consumer Financial Protection Bureau (CFPB). This is a US government agency that will forward your complaint to the mortgage lender, and then work to get a response.

Have you had PMI removed from your mortgage, or are you planning to in the near future? Have you used any of these methods? Share your experience!

Topics: Mortgages
Chase Total Checking®

38 Responses to “How to Get Rid of PMI”

  1. We have a mortgage we took out in 2003, and the lender still will not remove the PMI. We have requested in writing, quoting the dates from our loan documents, when it would be removed (2012) and they still send us form letters saying we must get an appraisal. Called one more time today (to follow up on the letters), and they said they would get back to us in 48 hours. If there is no resolution, will file a complaint with CFPB.

  2. I just had my house appraised in order to get rid of pmi because my houses value went up and we did some rennovations. I’ve told several people about it including my accountant and everyone has warned me that this might cause my property taxes to go up. If this happens I was most likely be paying more than I am saving. Is their truth to this?

  3. Bought my first house with conventional for 244k after 1.5 later y was able to get rid off my PIM.. on my own,I have to send a letter in writing,because my lenders “home officer” told me i have to wait 2 years, form the loan origination.
    All I did was cutting down my principal, I just paid less than $200 for the home evaluation.

    • Can you say more about the steps you took to do this, if your property taxes went up and if you had to have a traditional appraisal or if county record listing value at enought to be at 78-80% is enough?

  4. peter


    I am debating if I want to refinance my home. Purchased it back in 2012 at $237,000. My loan balance is now at $210,000/ FHA at 3.75%. My home is now worth $ 390,000 to $400,000 and I am not sure if I want to refinance my home to 30 year to get rid of the PMI. But I was thinking the money i am saving on the PMI and pay that towards the principle. What do you guys think? Is it worth it refinancing my home back to 30 years or continue pay PMI for another 5 years? Please advise! thank you!

  5. Cnjwatkins

    I have called my mortgage company about getting my pmi dropped. The said I qualify if I get an appraisal, but they sad I had to use their appraiser. One their appraisal is $650 versus local $ 400 and two it seems unethical for them to dictate who I pay to get the appraisal done. Is this legal?

    • I am curious on the answer to this one too. we are still within the first 2 years but have paid down the balance to below 78% thinking it should drop automatically as we were told and it was worth it to do that as opposed to a vacation or other items. I checked the next statement and it hadn’t so asked the lender why. the lender came back and said no you still need an appraisal, estimated at 400 but came back to say it is now 600 as the market is saturated. Is there another milestone at 2 years where the appraisal would not be required? strictly looking at costs it would then be cheaper to wait 5 months. i feel like all the answers they are giving me are rather dodgy though and am slightly concerned their appraiser will be ultra conservative. If the appraised value is anything less, even $1000, do they have the right to refuse? Overall though why would the PMI not drop automatically at 78%, the rules seem to leave it up to lender discretion somehow but I would love a specific rule arguing it must be dropped.

      • Eric, agreed with you. Just called my mortgage company and agent was extremely evasive when replying to my question about PMI falling off our loan. It wasn’t until I kept pressing that he disclosed anything close to specific details. I called him out on it too, and he got very snippy. From what I gather, it can depend on the type of loan as well as the lender itself. As far as the 2 year milestone, I’m told that the lender won’t recognize a new appraisal if the last one has been completed under 2 years. Also (and this still seems very murky) depending on the lender, you have to be at least 2 years past the loan origination date before PMI will fall off (the agent I was speaking with told me our lender’s rule was 5 years from origination date – I need to refer back to closing docs to find where it states that). I’m in a situation where a new appraisal would most definitely put us below 80% LTV but seems like there’s some other strings attached where lender would still weasel their way around it. Seems like such a racket! -Jack

        • What if you can demonstrate that the value of the property is sufficient to lower the mortgage value to 80% or less of the home’s current value, and the lender refuses to cooperate? Then file a complaint online with the Consumer Financial Protection Bureau (CFPB). This is a US government agency that will forward your complaint to the mortgage lender, and then work to get a response.

      • What if you can demonstrate that the value of the property is sufficient to lower the mortgage value to 80% or less of the home’s current value, and the lender refuses to cooperate? Then file a complaint online with the Consumer Financial Protection Bureau (CFPB). This is a US government agency that will forward your complaint to the mortgage lender, and then work to get a response.

    • What if you can demonstrate that the value of the property is sufficient to lower the mortgage value to 80% or less of the home’s current value, and the lender refuses to cooperate? Then file a complaint online with the Consumer Financial Protection Bureau (CFPB). This is a US government agency that will forward your complaint to the mortgage lender, and then work to get a response.

  6. I purchased my home in 2015 for 165 my loan was for 160,,, but I’ve been making extra payments… And the PMI was 145 a month… Did not understand that ( I thought that was high my first house )the house is now worth 250 hands down three just sold in my complex which are identical how do I get this freaking PMI off… I’ve talk to the lender and they will not budge

  7. My town raised my home’s assessed value such that, based on that figure, we’ve surpassed the 78% point (our mortgage value is about 75% now). However, based on the home’s value when we bought it in 2013, it’s at 88%. Will the lender accept the assessed value and remove my PMI?

    • Daniel

      Your lender will probably require that you use their appraiser, that way they know it’s not your buddy Joe doing you a favor. Unfortunately their appraisers are usually more pricey than the local guy.

  8. What is the deal with removing PMI after a refinance? We originally purchased our home for $190k and now owe just under $151k. By my calculations, we are eligible to have PMI eliminated, based on the original purchase price. However, we refinanced a few years ago at about $176k, and the mortgage company claims the amount of the loan upon refinancing is the figure they use to calculate whether PMI can be eliminated. Is this correct, or should the original purchase price be used?

    • My understanding is that the requirement for PMI is based upon the relationship between what you currently owe (current mortgage) divided by your current property value. If that relationship is less than 80% (or some people are saying mortgage companies may require it to be at 78%), then you may be able to drop the PMI. Example: If you currently owe $200,000 on your mortgage but your property value is now $250,000 that would be an 80% loan to value ratio. I also didn’t realize that they may require an actual appraisal to be completed vs a realtor market analysis.

  9. I purchased my home in March 2010 $255k (FHA) @ 4.75%. I currently owe $220k. The value of the property has increased to $320K. I don’t believe in refi (unless it’s detrimental that I do so) due to the bogus closing costs associated. How can I get rid of PMI?

  10. I am literally closing on a home purchase in two weeks. We put 15% down on a conventional loan, and were expecting to pay PMI. However, the home appraisal report shows we have a lot of built-in equity – enough to just push the LTV (79%) ratio out of PMI territory. I brought this up to my lender and he said that unfortunately the LTV is based on the lower purchase price ($490K), not the appraisal report ($525K), and so we’ll still need to pay PMI.

    Is he correct? Does this sounds right?

  11. I bought my home in July 2016 for $217k, 10% down conventional loan at 3.78% Home comps in my subdivision are now at $235-238K. Is it possible to get rid of PMI having less than 24 payments but more than 6, or will a re-fi up our interest rate?

  12. I purchased my home in September 2015. I am in process of refinancing but haven’t signed everything yet or paid for the appraisal because I’m a little nervous to bring my loan up 10k more. The lender is saying my payment will be $250 less. My PMI is $120. Is it too risky, or is it worth it? We also may want to sell the house in a few years, so that makes me wonder if we should not go through with it. Would love some advice! Thanks

    • Stephanie Colestock
      Stephanie Colestock


      Since you have an FHA loan, you’ll actually need to do a complete refi into a conventional loan, in order to get rid of the PMI. Of course, the refi will be an added cost — however, between the monthly PMI savings and a potentially-lower interest rate, it may be well worth your time and effort to look into soon.

      Best, Stephanie

  13. Scott

    What if you get a conventional with PMI….and as soon as you sell your other property refinance. I want to do that just after my condo sells. We would have the new loan for a house maybe a month. How soon can you refinance use the money from your sold property and get rid of the PMI. Or do you take that money and make it so your property is 78% down. I like to have money to fix up the house and doing this whole 78% would kill that I feel

  14. Wait, so unless I refinance with a conventional mortgage, I must pay my dreaded monthly $258 PMI for as long (ALL the way up to 30 yrs) as I have my FHA mortgage? I’m four years in…

    If I can make at least a 20% down payment (conventional), then I’d better get crackin and refinance while rates are still low, yes?

    • John – it depends on when you got your loan, and how much you put down when you bought the house.

      If you got your loan before June 3, 2013, then you just need to pay the loan down to 80% and you are eligible to have the insurance canceled.

      If you got your loan after that date, then it comes down to how much you put down on your house (the law changed!) –

      When you got your loan, if you put less than 10% down, you will have to pay mortgage insurance for the life of the loan.

      If you put more than 10% down, then you will have to pay mortgage insurance for 11 years.

      You can check out some more info here –

      But yea… if your home has appreciated, and you’re stuck paying mortgage insurance, a refinance into a conventional loan might be a great option!

  15. I’ve had two mortgages and two refinances and have never paid a penny of PMI. Putting at least 20% down is the single best strategy to avoid PMI. But, if you can’t afford that down payment, then you definitely want to work to get rid of it ASAP.

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