How to cancel PMI and save thousands

Most homeowners who bought with less than 20% down are paying private mortgage insurance every single month, and many don't realize they can cancel it, or when. The savings are real: often $100–$250 a month, year after year.

What PMI actually is

Private mortgage insurance protects your lender, not you, if you default on the loan. Lenders require it when your down payment is less than 20% of the home's purchase price, because a smaller stake means higher risk in their eyes.

PMI is collected as a line item on your monthly mortgage statement. It is not tax-deductible (as of 2026) and provides you no direct benefit. It exists purely to reduce the lender's exposure until you've built meaningful equity.

The 20% equity rule

The key number is loan-to-value ratio (LTV). When your outstanding balance drops to 80% or less of your home's current value, you've built 20% equity and are legally entitled to request PMI removal on a conventional loan.

Your LTV changes in two ways: you pay down principal each month via amortization, and your home's market value appreciates over time. In a rising market, both levers work in your favor simultaneously.

Your rights under federal law

The Homeowners Protection Act (HPA) of 1998 gives you specific rights on conventional loans:

• Request cancellation when you reach 80% LTV based on the original purchase price (or appraised value if higher at origination). You must be current on payments with a good 12–24 month history.
• Automatic termination at 78% LTV per the original amortization schedule. Your lender is legally required to cancel PMI at this point, even if you never ask.
• Final termination at the midpoint of your loan term as a backstop, regardless of LTV.

How to request early cancellation

1. Check your current LTV. Divide your loan balance by your home's current value. At or below 0.80? You likely qualify.
2. Submit a written request to your loan servicer. Most servicers accept requests through their online portal; always get written confirmation.
3. Order an appraisal if relying on appreciation. If market gains are what got you to 80%, your lender will typically require a certified appraisal ($400–$600). Paydown-only cancellation often requires just a servicer review.
4. Confirm your payment history is clean. Most servicers require 12–24 months of on-time payments and no 30-day lates in the past year.
5. Track the confirmation. Once approved, PMI removal must take effect the following billing cycle.

FHA loans: the rules are stricter

If your loan is FHA-backed, you have a mortgage insurance premium (MIP), not PMI, and the rules differ significantly. FHA loans originated after June 2013 with less than 10% down carry MIP for the life of the loan. The only way to remove it is to refinance into a conventional loan, which is typically worthwhile once you've built at least 20% equity and rates are comparable.

How to build equity faster

Not quite at 80% LTV yet? Two levers to pull:

• Extra principal payments. Even $100–$200/month applied to principal can shave months or years off your PMI timeline. When paying, explicitly designate it as "additional principal," since not all servicers apply overpayments to principal by default.
• Request a new appraisal. If your market has appreciated since you bought, a fresh appraisal may show you already qualify. The $400–$600 fee pays for itself in the first month of PMI savings if it gets you over the line.

Tracking your LTV manually means pulling your latest statement, estimating current property values, and doing the math yourself every quarter. CasaCrow monitors your LTV continuously and sends you an alert the moment you're eligible to cancel.