How to Remove PMI from Your Loan

PMI costs $50 to $300 per month, and nobody wants to pay it forever. The good news: you can get rid of it. The bad news: it doesn't happen automatically unless you know the rules.

Automatic Termination

By law, PMI automatically ends when your loan balance reaches 78% of the original home value. Your servicer must drop it on the exact date this threshold is met — no action needed from you.

But this is based on the original amortization schedule. If you've made extra payments or the home appreciated, you could be eligible much earlier.

Requesting Early Removal

You can request PMI removal when your loan balance reaches 80% of the original value. Submit a written request to your loan servicer. They may require:

• A current appraisal showing the home hasn't declined in value
• No late payments in the last 12 months
• Evidence that the loan is current and in good standing

The appraisal costs $400 to $700. If you've been paying PMI for years, it's worth every penny.

Refinancing Out of PMI

If home values in your area have risen significantly, refinancing can eliminate PMI. Say you bought at $300,000 with 5% down ($15,000). After 3 years of appreciation, the home is worth $380,000. Your remaining loan is $277,000. That's 73% LTV — no PMI needed on a new conventional loan.

Check your local market. If values are up 15% or more in 2 to 3 years, a no-PMI refi might be your move.

What About FHA MIP?

FHA loans are different. If you put less than 10% down, MIP stays for the life of the loan. The only way to remove it is to refinance to a conventional loan once you have 20% equity. Factor this into your long-term plan.

PMI removal is not automatic for early requests. Write the letter, get the appraisal, and save the monthly cost.