Federal law governing disclosures, borrower-requested cancellation, and automatic termination of PMI on many conventional mortgages.
The Homeowners Protection Act, usually called HPA, is the federal law governing disclosures, borrower-requested cancellation, and automatic termination of borrower-paid Private Mortgage Insurance (PMI) on many conventional home mortgages.
PMI protects the lender or mortgage investor, but the borrower usually pays the premium. HPA gives covered borrowers defined ways to end that cost instead of leaving removal entirely to servicer discretion.
The three main paths are not interchangeable:
These federal rules are minimum protections for covered loans. An investor or servicer may offer an earlier cancellation path, but it cannot make the HPA protection less favorable where the law applies.
Borrowers first encounter HPA through PMI disclosures at closing and annual notices while PMI remains in effect. The practical work happens during servicing, when the borrower tracks the balance, payment history, junior liens, and property value.
For the 80% request path, the servicer can generally require:
For a purchase mortgage, original value generally means the lower of the purchase price or appraised value when the home was bought. For a refinance, it generally means the appraised value relied on for that refinance. This HPA calculation is therefore different from a current-market Loan-to-Value Ratio (LTV) based on a new appraisal.
| Path | Balance reference | Borrower action | Key condition |
|---|---|---|---|
| Requested cancellation | Scheduled or actual balance reaches 80% of original value | Written request | Current, good payment history, and other eligibility evidence |
| Automatic termination | Scheduled balance reaches 78% of original value | None required | Borrower must be current for termination at that point |
| Final termination | Month after midpoint of original amortization schedule | None required | Borrower must be current |
The 78% test uses the scheduled balance, not a new appraisal showing the home appreciated. Extra principal payments can help the borrower reach the 80% request path early, but they do not move the scheduled 78% automatic-termination date in the same way.
A borrower buys a home for $400,000 and the appraisal is $410,000. For HPA purposes, the original value is generally $400,000. An 80% balance is $320,000, while a 78% balance is $312,000.
After extra principal payments reduce the balance to $320,000, the borrower sends a written cancellation request. The servicer checks payment history, current status, junior liens, and property-value evidence before deciding whether the request requirements are satisfied. If the borrower does nothing, automatic termination is generally tied to the scheduled date the balance reaches $312,000, assuming the account is current then.
HPA applies to PMI, not every mortgage-insurance program. FHA Mortgage Insurance Premium (MIP) follows FHA program rules rather than the HPA cancellation schedule. VA loans use a funding fee rather than monthly PMI.
High-risk loans and lender-paid mortgage insurance can also follow different rules. A borrower should identify the insurance type and investor before relying on the standard 80% and 78% paths.
HPA differs from Private Mortgage Insurance (PMI) because PMI is the insurance coverage and cost, while HPA is the federal cancellation and disclosure framework for covered PMI.
It also differs from PMI Cancellation, which is the practical removal event or process the borrower is trying to reach.
It differs from current Home Equity because HPA generally uses original value and scheduled loan balance. Market appreciation may support some investor-specific cancellation requests, but it does not rewrite the statutory 78% schedule.