How to remove PMI from your mortgage

What is PMI?

Private mortgage insuranceMortgage insurance (PMI or MIP) Insurance that protects the lender on many loans with a smaller down payment. It's added to your payment and can often be removed later. See the full glossary× (PMI) is insurance you may be required to buy on a conventional loan with a smaller down payment. It protects the lender, not you, if payments stop. Most people pay it monthly as part of the mortgage payment; some pay a one-time premium at closing, or a mix of both.

When can I ask to cancel PMI?

Under the federal Homeowners Protection Act, you can ask your servicer to cancel PMI once your balance is scheduled to reach a set share of the home's original value, or sooner if extra payments get you there. The servicer must grant the request if you meet these conditions:

• You ask in writing.
• You have a good payment history and are current on payments.
• You certify there are no other liens on the home, such as a second mortgage.
• You show the home's value hasn't dropped below its original value, for example with an appraisal.

The CFPB's PMI page lists the exact thresholds, and your servicer can tell you the date your loan reaches them.

Does PMI ever end on its own?

Yes, in two ways. Your servicer generally must end PMI automatically when your balance is scheduled to reach a slightly lower level, as long as you're current on payments. And if PMI is still in place at the midpoint of your loan's term, it must end the following month, again if you're current.

What counts as the home's original value?

Generally, the lower of the purchase price or the appraised value when you bought the home. If you refinanced, it's the appraised value at the refinance. Investors such as Fannie Mae and Freddie Mac, and servicers, may also remove PMI under their own standards, which can't be less favorable to you than the federal rules. Ask your servicer what applies to your loan.

Can extra payments remove PMI sooner?

Yes. Extra payments toward principal lower your balance faster, which can bring the cancellation date closer. Ask your servicer how to mark extra payments as principal, then request cancellation in writing once you qualify.

What if my lender pays the mortgage insurance?

Different rules apply to lender-paid mortgage insurance, where the cost is built into the loan instead of a separate premium. Check your loan documents or ask your servicer how it works for your loan.

What about FHA and VA loans?

FHA mortgage insurance follows HUD's rules, not the Homeowners Protection Act. For most newer FHA loans, how long the annual premium lasts depends on the original loan amount compared with the home's value, and it can last for the full loan term; the FHA guide covers it. Homeowners often drop FHA mortgage insurance by refinancing into a conventional loan once they have enough equity, and Tom can run the numbers with the break-even calculator. VA loans don't require PMI or monthly mortgage insurance, though a one-time funding feeFunding fee A one-time fee on VA loans that can be paid at closing or added to the loan. Veterans who receive VA disability compensation are exempt. See the full glossary× may apply (see the VA guide).