Rules and servicing steps for ending eligible borrower-paid conventional PMI through request, automatic termination, or final termination.
PMI cancellation is the ending of eligible borrower-paid private mortgage insurance before the mortgage is paid off. It can occur after a borrower request, through automatic termination, or through final termination at the loan’s amortization midpoint.
Ending PMI can reduce the monthly payment without changing the note rate or refinancing the mortgage. But the phrase “PMI comes off at 20% equity” compresses several different rules into an unreliable shortcut.
The federal Homeowners Protection Act (HPA) sets baseline rights for many borrower-paid PMI loans secured by a principal residence. Loan type, occupancy, payment history, liens, property value, original amortization schedule, and investor rules can change the available path.
PMI cancellation is a post-closing servicing issue. Borrowers usually encounter it while reviewing a mortgage statement, tracking principal balance, or asking why a mortgage-insurance charge remains after equity has increased.
The borrower contacts the Mortgage Servicer, not the original loan officer, unless the same company still performs both roles. A request may need to be written and may require evidence about payment history, current value, and junior liens.
For many covered, non-high-risk borrower-paid PMI loans, the main federal milestones use the home’s original value, not a new market estimate:
| Path | General milestone | Typical borrower action |
|---|---|---|
| Borrower-requested cancellation | Balance reaches 80% of original value, based on the scheduled date or qualifying actual payments | Submit a request and satisfy applicable conditions |
| Automatic termination | Scheduled balance reaches 78% of original value | No request is generally required, but the loan must be current |
| Final termination | Month after the midpoint of the original amortization period | No request is generally required, but the loan must be current |
If the loan is not current at an automatic or final termination date, termination generally occurs after the borrower becomes current. Special rules and exclusions can apply, including to high-risk loans.
Reaching 80% is a milestone, not the only condition. The servicer may require:
The borrower may have to pay for an appraisal or another permitted valuation. The servicer should explain the applicable procedure and reason if it denies the request.
A home had an original value of $400,000:
| Milestone | Balance |
|---|---|
| 80% borrower-request threshold | $320,000 |
| 78% automatic-termination threshold | $312,000 |
The amortization schedule shows the loan reaching $320,000 in June and $312,000 the following year. At the first milestone, the borrower may request cancellation and satisfy the required conditions. If PMI remains, the servicer generally must terminate it at the scheduled 78% milestone when the loan is current.
An increase in current market value may support a separate investor-permitted early-removal path, but it does not rewrite the HPA’s original-value calculation.
| Value concept | Common use in PMI removal |
|---|---|
| Original value | Federal 80% request and 78% automatic-termination framework |
| Current value | Some investor or servicer early-removal rules, often with seasoning and valuation requirements |
| Purchase price or original appraisal | The definition of original value generally depends on whether the loan was a purchase or refinance |
Borrowers should ask the servicer whether the request is being evaluated under HPA original-value rules or a separate current-value rule.
PMI cancellation differs from automatic termination because cancellation generally follows a borrower request, while automatic termination is a servicer obligation at the applicable scheduled milestone.
It differs from Mortgage Insurance Premium (MIP) because FHA MIP follows FHA program-duration rules, not conventional HPA PMI thresholds.
It also differs from refinancing. PMI can sometimes end while the existing mortgage remains in place; refinancing replaces the loan and requires a new approval, rate, and closing-cost decision.