Getting Rid of PMI Without Refinancing

Private mortgage insurance protects the lender, not you — and on a conventional loan, it isn’t permanent. Refinancing is one way out, but it’s usually the most expensive one, and often unnecessary if you’ve simply built enough equity to ask.

Routes that don’t require a new loan:

• Borrower-requested cancellation at 80% loan-to-value, based on the original purchase price or appraised value, whichever was lower
• Automatic termination at 78% LTV, which the servicer must complete on its own using the original amortization schedule
• Final termination at the midpoint of the loan term, regardless of loan-to-value
• A new appraisal documenting appreciation, which many servicers will accept as grounds for early cancellation
• Extra principal payments, which move you to the 80% threshold faster than the schedule would

What servicers typically require:

• A written request — cancellation at 80% does not happen on its own, even once you’ve reached it
• A clean recent payment history
• No second lien on the property, in most cases
• A seasoning period, commonly two years, before an appreciation-based cancellation will be considered

FHA mortgage insurance follows entirely different rules — on most current FHA loans the annual premium remains for the life of the loan, and refinancing into a conventional loan is the only way to remove it. Confirm which type of insurance you’re paying before assuming a cancellation request will work.