Home-value benchmark used for federal borrower-paid PMI cancellation and automatic-termination calculations.
Original value is the home-value benchmark used for federal borrower-paid PMI cancellation and automatic termination. For a purchase mortgage, it is generally the lower of the purchase price or appraised value when the loan closed; for a refinance, it is generally the appraised value relied on at closing.
The Homeowners Protection Act (HPA) uses original value to calculate key PMI milestones. The borrower-requested cancellation benchmark is generally 80% of original value, while automatic termination is generally tied to the scheduled balance reaching 78% of original value, subject to the law’s scope and loan-status conditions.
Original value is intentionally an origination benchmark. Later appreciation does not change that number. A servicer or investor may offer a separate current-value removal path, but that is not the same calculation.
The federal framework described here generally concerns borrower-paid PMI on covered conventional mortgages. FHA mortgage insurance, VA program charges, lender-paid mortgage insurance, and some loans outside the Homeowners Protection Act follow different rules. Borrowers should confirm the insurance type before applying the 80% and 78% benchmarks.
Borrowers may not notice the term at closing, even though the purchase contract and appraisal establish the inputs. It usually becomes visible during mortgage servicing when the borrower asks when PMI can end.
The servicer may use the closing records and original amortization schedule to identify the request and automatic-termination dates. If a borrower seeks earlier removal based on appreciation, the servicer may instead require a new appraisal or another accepted valuation under investor rules.
Borrower-requested cancellation and automatic termination are not identical. A request can require a written submission, current payments, good payment history, no disqualifying junior lien, and evidence that value has not declined. Automatic termination generally uses the scheduled balance date and requires the borrower to be current.
| Transaction | General original-value benchmark |
|---|---|
| Home purchase | Lower of purchase price or appraised value at closing |
| Mortgage refinance | Appraised value relied on when the refinance closed |
The servicer’s records control the operative benchmark. A later tax assessment, online estimate, broker opinion, or listing price does not rewrite the original-value figure.
The definition can depend on the transaction and applicable rule. Borrowers should use the value confirmed by the servicer rather than substitute a tax assessment, online estimate, or current listing price.
A buyer pays $410,000 for a home appraised at $400,000. For the covered PMI framework, the original value is generally $400,000 because it is the lower figure.
| PMI milestone | Calculation | Balance |
|---|---|---|
| Borrower-requested cancellation benchmark | $400,000 x 80% | $320,000 |
| Automatic-termination benchmark | $400,000 x 78% | $312,000 |
If the home later has a current market value of $460,000, the HPA original value remains $400,000. The higher current value may matter under a separate investor-permitted removal process, but it does not replace the original-value benchmark.
Original value differs from Appraised Value because appraised value is a valuation conclusion at a stated effective date. It is one input to original value for a purchase and generally the benchmark for a refinance.
It differs from Purchase Price because purchase price is the contract amount. For a purchase, original value generally uses the lower of price and appraisal.
It also differs from current market value. Current value reflects a later valuation date and may support a separate PMI-removal path, while original value remains anchored to the covered transaction’s closing.
Original value also differs from the current unpaid principal balance. Original value is the fixed denominator used for the statutory percentage milestones; principal balance is the loan amount that declines through scheduled payments, curtailments, or other principal reductions.