What PMI Is: 4 Rules for How It Drops Off Your Mortgage
What PMI is and how it ends: cancel at 80%, automatic removal at 78%, the midpoint rule, and a $400,000 home example.
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Private mortgage insurance, or PMI, is the extra monthly cost many buyers pay when their down payment is under 20%. It protects the lender, not you, and federal rules give you three paths to end it: request cancellation at 80%, automatic termination at 78%, and a midpoint cutoff. This guide is for homeowners paying PMI who want to know when it drops off and what to do at each step.
In this guide: - What PMI is and how you pay for it - The three legal paths to ending PMI, plus the payment rule - A worked example on a $400,000 home with 10% down - Three steps to get PMI removed on schedule - What to check before you contact your servicer
What PMI is and how you pay for it
PMI is a type of mortgage insurance you might be required to buy if you take out a conventional loan with a down payment of less than 20% of the purchase price. It is arranged by the lender and provided by private insurance companies. It protects the lender, not you: if you stop making payments, you can still lose your home through foreclosure.
The most common way to pay for PMI is a monthly premium added to your mortgage payment. A monthly premium appears in the Projected Payments section on page 1 of your Loan Estimate and Closing Disclosure. Sometimes you pay a one-time up-front premium at closing instead, or both up-front and monthly premiums, so ask for the total cost over a realistic timeframe before you sign.
| Path | Trigger | What you must do |
|---|---|---|
| Request cancellation | Principal scheduled to hit 80% of original value | Written request; current on payments; no junior liens; value not declined |
| Automatic termination | Principal scheduled to hit 78% of original value | Be current on payments |
| Midpoint termination | Month after halfway of the original loan term | Be current on payments |
| Extra payments | Principal reaches 80% ahead of schedule | Request early; same criteria as above |
What the table shows: you do not have to wait for the automatic cutoff. The 80% path is yours to trigger, and extra principal payments can pull that date years earlier. But every path shares one condition: you must be current on your payments. If you are behind, termination comes after you catch up.
A worked example: $400,000 home, 10% down
Assumptions: a $400,000 purchase price, $40,000 down (10%), a $360,000 conventional loan at 7% APR for 30 years, and no extra principal payments. The monthly principal-and-interest payment is about $2,395. "Original value" here is $400,000, so the 80% mark is a $320,000 balance and the 78% mark is a $312,000 balance.
On the scheduled amortization, the balance falls to $320,000 after about 101 payments, or roughly 8 years and 5 months. That is the first date you can request cancellation in writing. The balance reaches $312,000 after about 115 payments, or roughly 9 years and 7 months, which is when the servicer must terminate PMI automatically if you are current.
Now add extra payments: $300 a month toward principal from the start. In this example the balance reaches $320,000 after about 57 payments, roughly 3 years and 8 months earlier than the scheduled date. The exact timing depends on your rate and starting balance, but the direction is always the same: extra principal moves the 80% request date closer. This is the one lever you fully control.
Step 1: Find your numbers in your own paperwork
Your PMI disclosure form, which came with your mortgage, shows the first date you can request cancellation. If you cannot find it, contact your servicer and ask for three things: your current principal balance, the original value they have on file, and the scheduled dates for the 80% and 78% marks. Write them down. "Original value" generally means the lower of the contract sales price or the appraised value at purchase, or the appraised value at the time of a refinance.
Also confirm which kind of mortgage insurance you have. FHA and VA loans have different requirements, and some lenders may allow removal under their own standards. The three paths in this guide reflect the federal rules for single-family principal residences described by the CFPB.
Step 2: Make the written request at the 80% mark
You have the right to ask your servicer to cancel PMI on the date your principal balance is scheduled to fall to 80% of the original value, and you can ask earlier if extra payments got you there ahead of schedule. The servicer must grant the request if you meet the criteria: the request is in writing, you have a good payment history and are current, you certify there are no junior liens such as a second mortgage, and you show the home's value has not dropped below its original value, for example through an appraisal.
Do not rely on a phone call. Put the request in writing and keep a dated copy. If the servicer asks for an appraisal, ask which appraisers it accepts and keep the receipt. A lower value can block cancellation on schedule, so this step matters most in flat or falling markets.
Step 3: Track the loan to the 78% automatic cutoff
If you miss the 80% request or prefer not to act, the servicer must still terminate PMI automatically on the date the balance is scheduled to reach 78% of the original value, as long as you are current on payments. There is also a final backstop: the lender or servicer must end PMI the month after you reach the midpoint of the loan's amortization schedule, which is 15 years into a 30-year loan, even if the balance has not reached 78%.
Check your statements in the months around each date. The termination should appear as a drop in your monthly payment. If it does not, contact the servicer with your written record from step 1 and ask for the correction.
Before you contact your servicer
Confirm whether your insurance is PMI on a conventional loan, since FHA and VA loans follow different requirements. Pull your PMI disclosure form or ask the servicer for your scheduled 80% and 78% dates. Stay current on every payment in the months before either date. Put the cancellation request in writing and keep a dated copy. If your home's value may have fallen, be ready for the appraisal requirement.
This article is for general information, not financial advice.