When you bought a house with less than a 20% down payment, your mortgage lender tacked on the extra cost of private mortgage insurance (PMI) as a standard precaution. But you’re confident that your house is worth more today than when you purchased it, leading you to wonder: “Can I cancel PMI if my home value increases? When does PMI go away?”
Can You Cancel PMI? Check Your Home Value
Enter a few details about your property and we’ll provide you with a home value estimate in less than two minutes. This won’t replace an appraisal, but it can help you run some preliminary math on your approximate LTV.
Whether your individual mortgage qualifies for PMI removal will depend on factors like the amount you still owe on the loan and your payment history.
Many homeowners have seen their equity grow over time as home values continue to rise. With housing inventory often remaining tight, property values tend to increase, leaving many homeowners with mortgages sitting on significant equity. It’s always a good idea to check if you qualify for PMI cancellation as you build your home equity.
A higher equity stake in your home can lower the perceived risk of your mortgage and, in some cases, speed up the path to PMI removal. And because PMI can add tens of thousands of dollars in housing costs over the life of a loan, it’s important to consider taking steps to remove PMI as soon as you’re eligible.
Let’s take a look at how PMI works, and your options for cancellation.
What is PMI?
PMI is a type of mortgage insurance that protects the lender if a borrower stops making payments. It’s usually required when you obtain a conventional mortgage and make a down payment of less than 20%. (The term “conventional” refers to a loan that’s not part of a government program).
If — for any reason — you’re unable to keep up with your mortgage payments and the property goes into foreclosure, PMI will help to cover the lender against losses.
Most homeowners who carry PMI have borrower-paid private mortgage insurance, which they pay as an additional monthly fee with their mortgage.
According to the National Association of Realtors’ 2024 Profile of Home Buyers and Sellers, the typical down payment for first-time home buyers was 9% — the highest share since 1997. For repeat buyers, the median downpayment was 23%.
In other words, you’re not alone in paying PMI. It’s incredibly common. Sometimes paying PMI as an extra monthly charge is well worth the ability to buy a home before you can afford 20% down.
PMI usually costs between 0.2% and 2% of the yearly loan amount, though it can be higher or lower depending on your loan-to-value ratio.
What is loan-to-value ratio?
An important term to know about PMI is the loan-to-value ratio, often shortened to LTV. LTV expresses the amount of your mortgage’s principal balance compared to the purchase price of the home. Lenders use this figure to measure the loan’s risk, including when a borrower is eligible to cancel PMI.
Let’s say you purchase a $300,000 home and put $42,000 or 14% down. That means the loan amount will be $300,000 minus $42,000, or $258,000.
To calculate the LTV ratio, divide $258,000 by $300,000 to get 86. Expressed as a percentage, this is 86%. The LTV ratio is 86%.
PMI is generally required for borrowers who take out a conventional mortgage with a loan-to-value ratio of 81% or higher.
In this example, the lender will charge PMI until you qualify for auto-cancellation at 78% LTV or request PMI termination at 80% LTV.
How do I know if I qualify to cancel PMI?
There’s more than one route to canceling PMI. Next, we’ll discuss your main PMI cancellation options in depth:
1. You qualify for auto-cancellation with a 78% LTV.
Under the rules outlined by the Homeowners Protection Act (PMI Cancellation Act) of 1998 or HPA, homeowners have the right to have their PMI removed automatically on the date that their principal balance is scheduled to reach 78% of the original value.
On a home you bought for $300,000, you would qualify for auto-cancellation when your mortgage balance hit $234,000. (Divide $234,000 by $300,000 to get 78% LTV).
Homeowners must be up to date on their payments for automatic removal to take effect. Auto-removal does not take into account property upgrades or market appreciation. It is only based on how much you originally bought the house for.
2. You hit 80% LTV and request removal.
HPA allows homeowners to initiate PMI removal once the principal balance of their mortgage drops to 80% of the original value of their loan. In our $300,000 home example, you would have the ability to request PMI removal once the amount owed on your loan hits $240,000 (or 80% of $300,000).
You could hit 80% LTV ahead of schedule by making extra or larger payments on your mortgage than required. You could also set a notification for the date you’re scheduled to reach 80% LTV, so you’re reminded to put in the cancellation request with your mortgage servicer as soon as you’re eligible for PMI removal.
3. You re-appraise your home after it gains value.
Generally, you can request to cancel PMI when you reach at least 20% equity in your home. You might reach the 20% equity threshold by making your payments on time per your amortization schedule for loan repayment. But you also may get to that 20% benchmark faster thanks to rising property values in your area — or by investing in home improvements.
Let’s again say you purchased that lovely home for $300,000 a few years ago with $42,000 or 14% down, so you’re paying PMI. You notice that local news reports indicate that property values are rising. Based on some initial research, you estimate the current value to be $365,000.
So now, your equity in the home is $107,000. How did we get there? We took your $42,000 down payment and added $65,000 in equity gains due to market appreciation.
In this scenario, you’ve well surpassed 20% equity. You’re actually at nearly 30% — or $107,000 in equity divided by $365,000 in value, and that’s not counting the additional equity you’ve built making mortgage payments.
Let’s say you’ve paid $15,000 of your primary mortgage balance, bringing it to $243,000 ($15,000 subtracted from the original balance of $258,000). Meanwhile, your home value grew to $365,000. Your new LTV would be 67% ($243,000 divided by $365,000) or well below the 80% threshold.
In any case, it might be time to cancel PMI.
So let’s recap: What just happened?
The above example gets to the heart of the question: Can I cancel PMI if my home value increases? The answer is: Maybe!
“In an upswing like this, I would say you have a better chance of getting rid of your private mortgage insurance, but it’s not a guarantee, because it depends on each lender’s process and making that happen,” says Vickie Clark Jennings, a top real estate agent in Fredericksburg, Maryland with 38 years of experience.
Rising home values can build equity and increase your stake in the property, making you a potentially lower-risk borrower. Sometimes, to cancel PMI, all you have to do is make mortgage payments on time and watch your home value grow, then connect with your servicer on the next steps.
The same concept applies if you’ve made any major home improvements, such as a bedroom, kitchen, or bathroom remodel, to increase the appraised value of the home. When the appraised value of your home goes up since the time of purchase, it means your equity has grown, and it may allow you to lose the training wheels of your mortgage, your PMI.
So, having a solid idea of your home’s value and how it’s changed can help you track when it might be time to ditch the PMI. But a simple hunch won’t be enough to get your lender to remove it. You’ll need to get an appraisal or another official valuation of your home (more on that below.)
A quick (and free) way to check your home value
Get a preliminary home value estimate in as little as two minutes. Our tool uses information from multiple sources to give you a range of value based on current market trends.
4. You eliminate PMI when refinancing your home.
Freddie Mac predicts that mortgage rates will remain elevated for an extended period in 2025. However, slightly lower rates compared to 2024 are expected to drive an increase in refinance activity.
When you apply for a refinance, your lender will typically require an appraisal. If, based on the home’s appraised value, you have at least 20% equity, “then the second that that loan closes, the new loan starts without private mortgage insurance,” shares Richie Helali, a mortgage expert with HomeLight.
Keep in mind that you’ll have to pay closing costs on the refinance, including paying for that appraisal.
5. You’re midway through your loan’s term.
If you are up to date and current on your PMI payments, then the lender must terminate PMI the month after you reach the midpoint of your loan’s amortization schedule.
If you’re midway through your loan’s term, this PMI termination applies even if you have not reached 78% of the original value of your home. For example, on a 30-year loan, PMI would be removed after 15 years.
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