How to Get Rid of PMI: The Two Thresholds
Private mortgage insurance protects your lender, not you, yet you pay for it every month until your equity crosses a legal line. The fact most articles bury is that there are two separate thresholds, and both are measured against your home's original value (the lower of the purchase price or the original appraised value) — not today's market price. Knowing which threshold you're chasing, and that you must act at the first one, is what saves you money.
The two PMI milestones at a glance
Under the federal Homeowners Protection Act (the law the Consumer Financial Protection Bureau enforces), conventional loans have two distinct rules:
| Milestone | Equity / LTV | What happens | Your role |
|---|---|---|---|
| Borrower-requested cancellation | 20% equity (80% LTV) | Lender may cancel PMI | You must request it in writing — it is not automatic |
| Automatic termination | 22% equity (78% LTV) | Lender must cancel PMI | Happens on its own if you are current on payments |
The trap is the gap between them. If you do nothing, you keep paying PMI from the 20% point all the way to 22% — months of premiums for no reason. Both numbers are based on the original value, so as your scheduled balance drops you can calculate the exact dollar amount that triggers each one.
A worked example on a $300,000 home
Say you bought a $300,000 home with 10% down ($30,000), giving you a starting loan of $270,000 and an original value of $300,000. Your thresholds are fixed dollar amounts:
- 20% equity (request) milestone: 80% of $300,000 is a loan balance of $240,000. The first month your principal balance falls to $240,000 or below, you can send a written cancellation request.
- 22% equity (automatic) milestone: 78% of $300,000 is a loan balance of $234,000. If you never request, the lender must drop PMI on its own once your scheduled balance reaches this point and you are current.
To find when you hit $240,000, pull your loan's payoff schedule. Run your numbers through the mortgage calculator, read the amortization table, and find the first month the remaining balance is at or below $240,000. That row is the month to mail your request. Reading that table is the whole game — see amortization schedule explained for how to interpret each column. The higher your starting LTV, the longer the slow grind down to 20%, which is exactly why the accelerators below matter.
Three ways to reach 20% faster
1. Extra principal payments
Every extra dollar applied to principal pulls your payoff date — and your 80% LTV date — forward. Use the loan calculator to test adding a fixed amount each month and see how many months sooner you reach the $240,000 balance. Confirm with your servicer that extra payments are applied to principal, not prepaid toward next month's bill. This is the most reliable accelerator because you control it entirely; the same logic in our guide on how to pay off debt faster applies directly to your mortgage.
2. A new appraisal showing higher value
Many servicers let you request PMI removal based on current market value if your home has appreciated or you've made improvements — even if the original-value math hasn't gotten you there yet. Because the legal thresholds use original value, appreciation only helps through this separate route, which follows your investor's (often Fannie Mae or Freddie Mac) guidelines rather than the HPA. The LTV bar is usually stricter here — commonly 75% within the first few years after closing, easing toward 80% later — and a minimum seasoning period often applies. You typically pay for a lender-approved appraisal yourself. Ask your servicer for their exact LTV and seasoning requirements before you spend the money, since an appraisal that misses their threshold is wasted cash.
3. Refinance out of PMI
If rates have fallen or your equity has jumped, refinancing into a new loan below 80% LTV eliminates PMI on the new loan entirely. This only makes sense when the rate and closing-cost math works in your favor. Pressure-test it with the refinance break-even calculator to see how many months it takes to recover closing costs — if you'll move or pay off the loan before break-even, a simple cancellation request is the smarter play. If you're still planning a purchase, the down-payment calculator shows how putting 20% down up front avoids PMI from day one.
Gotchas that delay cancellation
- You must be current on payments. A recent late payment can postpone both the request and the automatic-termination dates.
- FHA loans work differently. The 20%/22% HPA rules apply to conventional loans only. For FHA loans taken out after June 2013, mortgage insurance (MIP) lasts the life of the loan if you put less than 10% down; with 10% or more down it drops off after 11 years, not when you hit 20% equity. The usual exit otherwise is a refinance into a conventional loan once you have enough equity.
- Original value, not Zillow. The automatic and request thresholds use the value at closing (or at your last refinance). A hot market doesn't move those two numbers — it only helps through the separate appraisal route above.
- Send requests in writing. A phone call leaves no paper trail. Put your cancellation request in writing and keep a copy.
Your action plan
Find your two dollar thresholds from your original value, locate the 80% LTV month in your amortization schedule, and either wait for it, accelerate to it with extra principal, or jump the line with an appraisal or refinance if the numbers justify the cost. Then request cancellation in writing the moment you qualify — don't drift to the 22% automatic date and pay months of premiums for nothing. These figures are estimates to help you plan; loan rules and servicer policies change, so confirm your servicer's exact requirements and check the CFPB's PMI guidance. Treat this as general information, not personalized financial advice.
Frequently Asked Questions
You can request cancellation in writing once your loan balance reaches 80% of your home's original value (20% equity). Original value means the lower of the purchase price or the original appraised value, not the current market price. It is not automatic at this point, so you must actively send the request to your servicer.
At 80% LTV (20% equity) you may request cancellation, but you have to ask in writing. At 78% LTV (22% equity) federal law requires the lender to automatically terminate PMI based on your scheduled balance, as long as you are current on payments. The gap means doing nothing costs you extra premiums between those two points.
Often yes, through your servicer's appraisal-based removal route, which follows investor guidelines (such as Fannie Mae or Freddie Mac) rather than the federal thresholds. Because the legal 20%/22% thresholds use original value, appreciation only helps via a new appraisal. Expect a stricter LTV bar (often 75% in the first few years, easing toward 80% later), a possible seasoning period, and an appraisal fee you usually pay yourself. Confirm requirements before paying.
Usually no. The 20%/22% rules apply to conventional loans under the Homeowners Protection Act. For FHA loans originated after June 2013, mortgage insurance lasts the life of the loan if you put less than 10% down; with 10% or more down it ends after 11 years, not at 20% equity. The common way out otherwise is refinancing into a conventional loan once you have enough equity.
Extra principal is the lowest-risk option since you control it and pay no fees, simply reaching 80% LTV sooner. Refinancing makes sense only if a lower rate plus PMI removal beats the closing costs within your time in the home. Run the refinance break-even calculator before deciding.