The Moment
You bought your home with less than 20% down and have been paying Private Mortgage Insurance (PMI) — $100-$300+ per month on top of your mortgage payment. PMI protects the lender, not you. Once you have 20% equity, you should not be paying it.
The savings from removing PMI are immediate and significant: $1,200-$3,600+ per year that goes directly back to you.
The Two Paths to Removal
Path 1 — Automatic cancellation (no action needed) By law (Homeowners Protection Act), your lender must automatically cancel PMI when your loan-to-value ratio (LTV) reaches 78% of the original purchase price. This happens naturally as you make payments and build equity.
Path 2 — Requested cancellation (you act at 80% LTV) You can request PMI removal when your LTV reaches 80% (20% equity). Contact your lender in writing and request cancellation. Requirements typically include: - Good payment history (no 30-day late payments in the last 12 months) - Current on the mortgage - Proof that LTV is at or below 80% (may require a new appraisal at $300-$600)
How to get to 20% equity faster:
Extra principal payments: Every dollar of extra principal reduces your LTV. On a $300,000 mortgage, you need to reach a $240,000 balance (80% of the original value). If your balance is $255,000, an extra $15,000 in principal payments gets you there.
Home appreciation: If your home has increased in value, your LTV has improved even without extra payments. Request a new appraisal from your lender. If the appraised value shows 20%+ equity, PMI can be removed.
Example: You bought at $300,000 with $15,000 down (5%). Mortgage: $285,000. Home now appraises at $350,000. Current LTV: $285,000 / $350,000 = 81.4%. You are close — a few months of payments or a small extra principal payment gets you to 80%.
Run Your Numbers
Enter your mortgage details to see when you reach 80% LTV.
Mortgage Payoff Planner
What to explore next
- →Should I make extra mortgage payments to remove PMI faster?
- →Should I refinance to remove FHA mortgage insurance?
- →How do I request a new home appraisal?
Frequently Asked Questions
Does this apply to FHA loans?
FHA loans have different rules. For FHA loans originated after June 2013 with less than 10% down, mortgage insurance premium (MIP) lasts for the life of the loan — it never cancels. The only way to remove it is to refinance into a conventional loan once you have 20% equity. For FHA loans with 10%+ down, MIP cancels after 11 years.
Is it worth getting a new appraisal to remove PMI?
If the appraisal ($300-$600) shows 20%+ equity and removes $200/month in PMI, you recoup the appraisal cost in 2-3 months. The math almost always favors getting the appraisal if you believe your home has appreciated significantly.