PMI doesn't last for the life of a conventional mortgage.
Federal law gives borrowers with many conventional loans the right to request cancellation once the balance reaches certain thresholds, and PMI generally terminates automatically when the scheduled principal balance reaches 78% of the home’s original value.
FHA mortgage insurance works differently.
On an FHA loan with a case number assigned on or after June 3, 2013, annual mortgage insurance lasts for the mortgage term when the original loan-to-value ratio is above 90%, which includes a typical FHA purchase made with 3.5% down.
PMI Removal Basics
| Loan Type |
How Long Mortgage Insurance or Fees Last |
| Conventional loan with borrower-paid PMI |
Cancellation can generally be requested at 80% of the home’s original value if requirements are met. Automatic termination generally occurs when the scheduled balance reaches 78% of original value and payments are current. |
| FHA loan assigned on or after June 3, 2013, with original LTV above 90% |
Annual MIP generally lasts for the mortgage term. |
| FHA loan assigned on or after June 3, 2013, with original LTV of 90% or less |
Annual MIP lasts 11 years. |
| Certain older FHA loans assigned before June 3, 2013 |
Older cancellation rules may apply, including a 78% balance threshold for eligible loans and, for some longer-term mortgages, a minimum five-year payment period. |
| VA loan |
No monthly mortgage insurance is required. A one-time VA funding fee may apply unless the borrower is exempt. |
| USDA guaranteed loan |
An annual guarantee fee applies for the life of the guaranteed loan. This is not PMI. |
PMI technically refers to private mortgage insurance on conventional loans. FHA uses mortgage insurance premiums, or MIP, while USDA uses guarantee fees. The terminology differs because the programs have different rules for how mortgage insurance works by loan type.
Conventional PMI: The 80% and 78% Rules
Two percentages are central to conventional PMI cancellation: 80% and 78%. They describe different rights under the federal Homeowners Protection Act.
You Can Request PMI Cancellation at 80%
For many mortgages on a single-family principal residence, the CFPB explains that you can ask your servicer to cancel PMI on the date your principal balance is scheduled to reach 80% of the home’s original value.
You may also be able to make additional principal payments and request cancellation after the balance actually reaches 80% of the original value.
Reaching 80% does not mean the servicer must remove PMI without any other conditions. The federal cancellation right can require you to make the request in writing, have a good payment history, be current on the mortgage and provide evidence that the property has not fallen below its original value. The servicer may also require certification that there are no subordinate liens on the home.
PMI Generally Terminates Automatically at 78%
If you do nothing, borrower-paid PMI on many conventional mortgages generally must terminate when the loan is scheduled to reach 78% of the home’s original value, provided you are current on your payments.
The word “scheduled” matters. Automatic termination is based on the amortization schedule and the home’s original value. A new appraisal showing that your home has increased in value does not move the federal 78% automatic termination date forward.
If you are not current when the loan reaches its scheduled termination point, PMI generally must be terminated after you bring the mortgage current.
There Is Also a Midpoint Termination Rule
Federal law provides another backstop. PMI generally must end after the mortgage reaches the midpoint of its original amortization period if it has not already terminated under the 78% rule, assuming the borrower is current.
On a 30-year mortgage, for example, the midpoint is reached after 15 years. This provision is most relevant to loans whose structure prevents the balance from reaching 78% on the normal schedule before that point.
FHA Mortgage Insurance Is Different
The conventional 80% and 78% rules do not apply to FHA mortgage insurance. FHA uses its own rules, and those rules changed in 2013.
Most Low-Down-Payment FHA Loans Carry MIP for the Mortgage Term
For FHA loans with case numbers assigned on or after June 3, 2013, HUD bases the duration of annual MIP on the loan’s original LTV.
If the original LTV was greater than 90%, annual MIP generally lasts for the mortgage term. A typical FHA purchase made with the program’s 3.5% minimum investment starts above that 90% threshold.
If the original LTV was 90% or less, annual MIP generally lasts for 11 years.
This is why simply reaching 20% equity does not necessarily result in FHA mortgage insurance being removed. For a post-2013 FHA loan that began above 90% LTV, paying the balance down to 80% or 78% does not trigger the conventional PMI cancellation rules.
Older FHA Loans Can Follow Different Rules
Certain FHA mortgages with case numbers assigned before June 3, 2013, can qualify under earlier cancellation rules. HUD says eligible loans from this period may stop monthly MIP after reaching the applicable 78% balance threshold. For mortgages with terms longer than 15 years, some of those loans also require at least five years of MIP payments.
Because the rules depend on when the FHA case number was assigned and other loan details, borrowers with older FHA mortgages should confirm the applicable cancellation date with their servicer rather than applying the current FHA rule retroactively.
Three Ways PMI or Mortgage Insurance Can End
The options available to you depend heavily on whether you have conventional PMI or FHA mortgage insurance.
1. Pay Down a Conventional Mortgage
With borrower-paid PMI on an eligible conventional mortgage, reducing the principal balance can move you toward the 80% cancellation threshold. Extra principal payments may allow you to reach that point before the date shown on your original amortization schedule.
The key measurement under the federal borrower-requested cancellation rule is generally the first mortgage balance relative to the property’s original value.
If you also have a HELOC or another second lien, your combined loan-to-value ratio measures all of those mortgage balances together. CLTV can be useful for understanding your broader equity position, but it should not be confused with the specific LTV calculation used for the federal PMI cancellation thresholds.
2. Use a New Property Value When the Applicable Rules Allow It
Home appreciation or substantial improvements can sometimes create another path to conventional PMI cancellation, although these rules are separate from the federal 78% automatic termination requirement.
For example, Fannie Mae permits borrower-requested mortgage insurance termination based on a property’s current value when applicable seasoning, LTV, payment-history and valuation requirements are met. Substantial improvements can also affect some of those requirements.
A servicer may need an approved valuation, broker price opinion or appraisal rather than simply accepting an online home-value estimate. The exact process depends on the investor and servicer.
3. Refinance Into a Loan Without Mortgage Insurance
Refinancing replaces your existing mortgage with a new one. If your home equity and other qualifications support a new conventional mortgage without PMI, a refinance can remove PMI because the old insured mortgage is being paid off rather than because its insurance was canceled.
This can also matter for FHA borrowers. Someone whose FHA mortgage insurance would otherwise last for the loan term may eventually have enough equity and meet the other requirements to refinance from an FHA loan into a conventional loan without PMI.
That should not be confused with an FHA streamline refinance. A streamline refinance remains an FHA-insured mortgage, so it is not generally a way to switch out of FHA mortgage insurance entirely.
Whether a valuation will be required also depends on the refinance transaction. Some refinance programs can have different valuation requirements, so whether you need an appraisal when refinancing depends on the new loan rather than your old mortgage alone.
Refinancing comes with a new interest rate, closing costs and loan terms. Eliminating mortgage insurance by itself does not establish that a refinance will save money overall.
What Does It Cost to Keep Paying PMI?
PMI adds to your monthly housing cost for as long as it remains on the loan. How much you pay depends on factors such as the loan, down payment, coverage requirements and borrower characteristics.
If you already have a conventional mortgage, you can use your current premium and expected cancellation date to estimate what remaining PMI payments could cost. If you are still planning a purchase, an estimate of your potential PMI can show how different down payments affect the monthly payment.
That comparison can also help when deciding how much to put down initially. Reaching a 20% down payment on a conventional purchase generally avoids borrower-paid PMI from the start, but doing so also requires substantially more cash upfront.
Do VA and USDA Loans Have PMI?
Neither VA nor USDA guaranteed loans use conventional PMI, but their fee structures are different from each other.
VA Loans Do Not Require Monthly Mortgage Insurance
VA-backed home loans do not require monthly PMI or FHA-style MIP. Instead, many borrowers pay a one-time VA funding fee. Some veterans, service members and surviving spouses qualify for an exemption from the VA funding fee.
The VA explains that the funding fee helps support a program that does not require monthly mortgage insurance.
USDA Loans Have an Annual Guarantee Fee
USDA guaranteed loans also do not use conventional PMI. They instead have an upfront guarantee fee and an annual guarantee fee.
For USDA Single Family Housing Guaranteed Loans subject to the annual fee, USDA Rural Development assesses that fee for the life of the guaranteed loan. The charge declines in dollar terms as the scheduled unpaid principal balance used in the calculation declines, but it does not automatically disappear at 80% or 78% LTV.
The Bottom Line
PMI does not last forever on many conventional mortgages. You can generally request cancellation when the loan reaches the applicable 80% threshold and other requirements are met, while automatic termination generally occurs when the scheduled balance reaches 78% of the home’s original value and the loan is current.
FHA mortgage insurance follows a different system. For FHA case numbers assigned on or after June 3, 2013, an original LTV above 90% generally means annual MIP lasts for the mortgage term. An original LTV of 90% or less generally means 11 years of annual MIP.
Before deciding whether to pay down the loan, request a new valuation or refinance, first identify the type of mortgage insurance you actually have and the rules that apply to that loan.
FAQ
Does PMI Ever Go Away?
Yes. Borrower-paid PMI on many conventional mortgages can be canceled before the end of the loan. Borrowers can generally request cancellation when the mortgage reaches the applicable 80% threshold and other requirements are met. PMI generally terminates automatically when the scheduled balance reaches 78% of the home’s original value if the borrower is current.
Does PMI Automatically Go Away at 20% Equity?
Not necessarily. For many conventional loans, reaching 80% of the home’s original value gives you the right to request PMI cancellation if the other requirements are satisfied. Automatic termination generally occurs when the scheduled principal balance reaches 78% of the home’s original value. Home appreciation alone does not change that federal automatic termination date.
How Do I Get Rid of PMI?
With an eligible conventional mortgage, you may be able to request cancellation after reaching the applicable equity threshold, qualify for cancellation based on a current property value under investor rules or refinance into a new loan that does not require PMI. The requirements depend on your mortgage and servicer.
Does FHA Mortgage Insurance Ever Go Away?
Sometimes. For FHA loans with case numbers assigned on or after June 3, 2013, annual MIP generally lasts 11 years when the original LTV was 90% or less. If the original LTV was above 90%, annual MIP generally lasts for the mortgage term. Older FHA loans can follow different cancellation rules.
Can I Remove PMI by Getting an Appraisal?
Possibly, but a new appraisal does not automatically cancel PMI. Some conventional mortgage investors allow borrower-requested cancellation based on the property’s current value when seasoning, LTV, payment-history and valuation requirements are met. Your servicer can tell you which rules apply and what type of valuation is required.
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