How To Refinance Your Mortgage To Eliminate PMI In 2026

Refinancing to remove private mortgage insurance, or PMI, in 2026 can lower your monthly payment and help you preserve more of your equity.

If your home’s value has increased or you have paid down your principal balance, refinancing into a conventional loan at or below 80 percent loan-to-value, or LTV, may eliminate PMI.

This article focuses on PMI for conventional loans. If you want to learn about refinancing to eliminate MIP on an FHA loan, read our guide here.

Understanding PMI And When It Can Be Removed

Private mortgage insurance is typically required on conventional loans when your equity is below 20%. PMI costs commonly range from roughly 0.3% to 2% of the loan balance annually, depending on your credit score, loan-to-value ratio, and loan type.

There are three primary ways PMI can be removed:

Automatic cancellation: Your servicer must automatically cancel PMI when your loan reaches 78 percent of the original home value, based on your initial amortization schedule, provided you are current on payments.

Borrower-requested cancellation: You may request PMI removal once your loan reaches 80 percent of the original home value. Lenders typically require a strong payment history and confirmation that there are no junior liens.

Refinancing: You can eliminate PMI by refinancing into a new conventional loan at or below 80 percent LTV based on the current appraised value of your home.

PMI Removal Comparison

Loan-To-Value Ratio Calculator

You can use our calculator to explore different loan-to-value ratios. Keep in mind that you’ll need to connect with a loan officer and get an appraisal to get an accurate idea of your loan-to-value ratio.

Checking Your Mortgage Type And PMI Rules

PMI rules differ depending on loan type.

For conventional loans, PMI can be canceled automatically at 78 percent LTV or by request at 80 percent, subject to payment history and lien requirements.

FHA loans use mortgage insurance premiums, or MIP. Many FHA loans require MIP for the life of the loan unless you refinance into a conventional mortgage after building sufficient equity.

Preparing Documentation And Appraisal Requirements

To remove PMI through refinancing, you must verify equity and financial eligibility.

Common documentation includes recent mortgage statements, proof of consistent on-time payments, income verification, and documentation showing no junior liens

A full appraisal is often required if you are near the 80% LTV threshold. Appraisal costs are commonly several hundred dollars, often ranging between $400 and $700 depending on market and property type.

Evaluating The Cost-Benefit Of Refinancing

Before refinancing, determine whether savings exceed costs over your expected time in the home.

Refinance closing costs for many conventional loans commonly range between 2% and 5% of the loan amount. Actual costs vary by market and loan structure.

PMI savings often range from $50 to several hundred dollars per month, depending on loan size and PMI rate. That means it’ll take time to break even on refinancing, although lowering your monthly payment can still boost your finances in the short-term.

Keep in mind that your mortgage rate also matters. Getting a lower rate and also removing PMI makes a strong case for moving forward with the refinance, but if your rate will increase you’ll need to carefully evaluate your monthly savings. A rate change high enough to eclipse PMI savings will limit your benefits.

Comparing Refinance Options To Remove PMI

There are multiple ways mortgage insurance may be structured.

A conventional refinance at 80 percent or less LTV removes PMI entirely on the new loan.

There’s also lender-paid mortgage insurance, where the lender builds mortgage insurance into a higher interest rate. There is no separate PMI payment, but the cost remains embedded in the rate. It cannot be canceled and would require refinancing again to remove.

You could also use a piggyback structure, although those are more limited. That includes a first mortgage at 80% LTV combined with a second lien to avoid PMI. That structure is more common in purchase scenarios but may be available in limited refinance situations.

There’s also single-premium or split-premium mortgage insurance, in which mortgage insurance is paid upfront or partially upfront in exchange for lower monthly payments. This structure is not cancelable like standard borrower-paid PMI.

Alternatives To Refinancing

Keep in mind that refinancing isn’t the only way to stop paying PMI on a conventional loan. You can request PMI cancellation when you reach 80% LTV of the original value, and PMI is cancelled automatically at 78%.

If you have a strong cash flow, you can also make extra monthly payments to reach 78% LTV faster.

For FHA borrowers, refinancing into a conventional loan is often the primary path to eliminating ongoing mortgage insurance.

The Bottom Line

Refinancing can be an option to eliminate PMI on a conventional mortgage if you meet LTV requirements.

If you refinance based on a new appraisal and hit 80% loan-to-value, you won’t have PMI on your new loan. But refinancing isn’t the only option for removing PMI: You can also request that it be cancelled at 80% LTV, and it is cancelled automatically at 78%.

Frequently Asked Questions

Can I Refinance To Eliminate PMI And What Equity Do I Need?

Yes. If your loan-to-value ratio is at or below 80 percent based on a current appraisal, refinancing into a conventional loan may eliminate PMI.

What Are The Costs And Savings Of Removing PMI?

Refinance closing costs often range from 2 percent to 5 percent of the loan amount. Monthly PMI savings commonly range from $50 to several hundred dollars, depending on your loan size and rate.

When Does Refinancing To Remove PMI Make Sense?

Refinancing may make sense when you have at least 20 percent equity, interest rates are favorable, and you plan to remain in the home beyond your break-even point.

Can PMI Be Removed Without Refinancing?

Yes. PMI may be removed through borrower-requested cancellation at 80 percent LTV or automatic cancellation at 78 percent LTV, provided payment requirements are met.

If you want personalized scenario comparisons, a licensed mortgage advisor can review your equity position, rate environment, and long-term goals to determine whether refinancing to remove PMI aligns with your financial plan.