Remove PMI Early 2026: 5 Ways to Cancel Mortgage Insurance & Save $200+/Month
Amanda Foster
Mortgage Refinance Expert | PMI Specialist | 12+ Years
NMLS #856234 | Helped 1,000+ Homeowners Remove PMI
Stop paying PMI and save $200-300/month! Learn 5 proven methods to remove private mortgage insurance early: automatic removal, requested cancellation, refinance, reappraisal, and extra payments. Real examples + step-by-step instructions.
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What is PMI & Why You're Paying It
📋 PMI Definition:
Private Mortgage Insurance (PMI) is insurance that protects the lender (not you) if you default on your loan. Required when you put down less than 20% on a conventional mortgage.
PMI Cost:
• Typical cost: 0.5% - 1.5% of loan amount per year
• $300K loan = $125-375/month PMI
• $400K loan = $167-500/month PMI
• Over 10 years: $15,000 - $60,000 total!
When PMI Is Required
| Down Payment | LTV Ratio | PMI Required? |
|---|---|---|
| 20%+ down | 80% or less | ❌ No PMI |
| 15-19% down | 81-85% | ✅ PMI Required |
| 10-14% down | 86-90% | ✅ PMI Required |
| 5-9% down | 91-95% | ✅ PMI Required (Higher) |
| 3-4% down | 96-97% | ✅ PMI Required (Highest) |
⚠️ Important:
PMI only applies to conventional loans. FHA loans have MIP (mortgage insurance premium) which works differently and is harder to remove. VA and USDA loans have no PMI.
5 Proven Ways to Remove PMI Early
Method #1: Automatic PMI Removal at 78% LTV (No Action Required)
By law, your lender MUST automatically cancel PMI when your loan balance reaches 78% of the original home value. This happens through regular monthly payments.
Example Timeline:
• Purchase price: $350,000
• Down payment: 5% ($17,500)
• Original loan: $332,500
• 78% LTV: $273,000
• PMI automatically removed when balance hits $273,000
• With 6.5% rate: Takes about 11 years
Requirements:
- • Must be current on payments (no 30-day lates in past year)
- • Based on ORIGINAL home value (not current value)
- • Lender sends notice 30 days before automatic removal
Method #2: Request PMI Removal at 80% LTV (Fastest Way)
Most popular method. You can REQUEST PMI removal once you reach 80% LTV based on CURRENT home value (if it increased).
Real Success Story:
Sarah bought in 2022 for $300K with 5% down ($285K loan).
Home value increased to $380K by 2024.
New LTV: $285K ÷ $380K = 75% ✅
Requested removal, got appraisal, PMI removed in 30 days!
Saved $225/month = $2,700/year
Step-by-Step Process:
- 1. Call your lender and request PMI removal
- 2. Order appraisal ($400-600, you pay)
- 3. Appraisal shows 80% LTV or less
- 4. Submit request in writing with appraisal
- 5. Lender reviews (7-14 days)
- 6. PMI removed! (effective next month)
Method #3: Refinance to Remove PMI (Best if Rates Dropped)
Refinance into a new loan with 20%+ equity. Works even if home value didn't increase much.
When Refinancing Makes Sense:
- • Current rate is 0.5%+ higher than today's rates
- • You have 20%+ equity (80% LTV or less)
- • You'll stay in home 3+ more years
- • Closing costs are 2-3% of loan amount
Example Scenario:
Current loan: $320K at 7.25% + $280/month PMI = $2,458/month
Refinance: $320K at 6.50% + $0 PMI = $2,022/month
Savings: $436/month = $5,232/year!
Break-even: 18 months (if closing costs are $8,000)
Compare refinance rates and see if you can remove PMI while lowering your rate.
Method #4: Make Extra Payments to Reach 80% LTV Faster
Pay down your loan balance faster with extra principal payments to reach 80% LTV sooner.
Accelerated Payoff Example:
Loan balance: $285,000
Original value: $300,000
80% LTV target: $240,000
Need to pay down: $45,000
Option A: Regular payments = 8 years to reach 80% LTV
Option B: Extra $500/month = 5 years to reach 80% LTV ✅
Saves 3 years of PMI = $8,100 saved!
⚠️ Important:
Mark extra payments as "principal only" to ensure they reduce your loan balance (not prepay interest).
Method #5: Home Improvements to Increase Value (Reappraisal)
Make strategic home improvements to increase value, then get reappraisal to show 80% LTV.
Best ROI Improvements for PMI Removal:
- • Kitchen remodel: 70-80% ROI, adds $15-30K value
- • Bathroom remodel: 60-70% ROI, adds $10-20K value
- • Finished basement: 70-75% ROI, adds $20-40K value
- • New roof: 60% ROI, adds $10-15K value
- • Landscaping: 100%+ ROI, adds $5-15K value
Example Strategy:
Home value: $320,000
Loan balance: $270,000
Current LTV: 84.4% (need 80%)
Invest $15K in kitchen remodel → Home value increases to $340K
New LTV: $270K ÷ $340K = 79.4% ✅
Get reappraisal → PMI removed!
Saves $200/month PMI = Break-even in 6 years
💡 Get Expert Help Removing PMI
Work with lenders who specialize in PMI removal strategies and can guide you through the fastest path.
Get Matched with PMI Removal Experts →PMI Removal Requirements by Lender
⚠️ Lender-Specific Rules:
Each lender has different PMI removal requirements. Here are the most common policies from major lenders.
Wells Fargo PMI Removal
Requirements:
- • 80% LTV based on current value (appraisal required)
- • Minimum 2 years of payments (5 years if investment property)
- • No 30-day late payments in past 12 months
- • Borrower pays for appraisal ($400-600)
- • Written request required
Chase PMI Removal
Requirements:
- • 80% LTV (75% for investment properties)
- • Minimum 2 years of payments
- • Good payment history (no lates)
- • BPO or appraisal required (Chase pays if approved)
- • Online request available
Bank of America PMI Removal
Requirements:
- • 80% LTV based on lesser of original or current value
- • Minimum 2 years of payments (can waive with 75% LTV)
- • No 60-day late payments in past 24 months
- • Appraisal required (borrower pays)
- • Call 800-669-6607 to request
Quicken Loans/Rocket Mortgage PMI Removal
Requirements:
- • 80% LTV (appraisal or AVM required)
- • Minimum 2 years of payments
- • Excellent payment history
- • Online request through Rocket Account
- • Fast processing (7-14 days)
Common PMI Removal Mistakes to Avoid
Mistake #1: Waiting for Automatic Removal (Costs You Thousands)
Many homeowners wait for automatic 78% LTV removal based on ORIGINAL value, missing out on early removal based on CURRENT value.
Cost of Waiting:
If your home increased in value, you could remove PMI 2-5 years earlier by requesting removal.
2 years early = $5,000-7,000 saved
5 years early = $12,000-18,000 saved
Mistake #2: Not Checking Home Value Annually
Home values change. Check annually to see if you've reached 80% LTV.
How to Check:
- • Zillow Zestimate (free, rough estimate)
- • Redfin Estimate (free, rough estimate)
- • Realtor.com Home Value (free)
- • CMA from real estate agent (free, more accurate)
- • Full appraisal ($400-600, most accurate)
Mistake #3: Not Making Extra Principal Payments
Even $100-200/month extra can shave years off reaching 80% LTV.
Impact of Extra Payments:
$300K loan at 6.5%:
• Regular payments: 11 years to 80% LTV
• Extra $200/month: 7 years to 80% LTV ✅
• Saves 4 years of PMI = $9,600!
Mistake #4: Confusing PMI with FHA MIP
PMI (conventional loans) can be removed. FHA MIP is much harder to remove.
| Feature | PMI (Conventional) | MIP (FHA) |
|---|---|---|
| Can Remove? | ✅ Yes, at 80% LTV | ❌ Only by refinancing |
| Duration | Until 78-80% LTV | Life of loan (if <10% down) |
| Cost | 0.5-1.5% annually | 0.85% annually + 1.75% upfront |
Frequently Asked Questions
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