How to Drop PMI and Lower Your Monthly Mortgage Payment

Private mortgage insurance protects the lender, not you — and if you put less than 20% down on a conventional loan, you’re almost certainly paying it. PMI typically costs 0.3% to 1.5% of the loan amount per year, which adds up fast. The good news: it doesn’t have to stay forever.

There are three main ways to get rid of PMI:

1. Automatic termination

Under federal law, your lender must cancel PMI automatically when your loan balance reaches 78% of the original purchase price, assuming you’re current on payments.

2. Request cancellation at 80% LTV

You don’t have to wait for the automatic trigger. Once your balance reaches 80% of the original value, you can submit a written request. Your lender may require a current home appraisal.

3. Refinance

If your home has appreciated significantly, a refinance at your new, higher value may push you below 80% LTV and eliminate PMI — sometimes while also lowering your rate.

For many homeowners, dropping PMI quietly returns $100 to $300 per month to the household budget. It’s one of the simplest wins in homeownership — you just have to ask for it.