When will PMI be removed?

“Key Triggers for PMI Cancellation”

PMI (Private Mortgage Insurance) doesn’t last forever, but the timing of when it gets removed depends on how you reach the required equity in your home and the type of loan you have. Here’s the breakdown...

Conventional Loans (Fannie Mae / Freddie Mac):

1. Borrower-requested PMI removal

You can request PMI cancellation when your loan balance reaches 80% of the original home value (meaning you have 20% equity).
Requirements:
You must be current on your mortgage payments.
The lender may require an appraisal to confirm your home’s value if you’re relying on increased value rather than just the original purchase price.

2. Automatic PMI removal

Your servicer must automatically remove PMI when your loan balance reaches 78% of the original value (based on the original amortization schedule).
This happens regardless of appreciation or current market value, as long as you’re current on payments.

3. Final termination

Even if you haven’t reached 78% LTV yet, PMI must end automatically at the midpoint of your loan term (e.g., year 15 of a 30-year mortgage), as long as you’re current.

FHA Loans (Federal Housing Administration)

FHA doesn’t use “PMI” but charges Mortgage Insurance Premium (MIP).

If you put <10% down → MIP lasts for the life of the loan.
If you put ≥10% down → MIP is removed after 11 years.
The only other way to remove MIP is by refinancing into a conventional loan once you qualify.

VA Loans (Department of Veterans Affairs)

No monthly PMI or MIP at all.
Instead, VA loans charge a one-time funding fee (unless exempt, e.g., disability rating).
Nothing to remove.

USDA Loans (Rural Development)

No PMI, but USDA requires two forms of guarantee fees:
Upfront guarantee fee (rolled into loan in most cases).
Annual fee (paid monthly).
The annual fee lasts for the life of the loan (doesn’t automatically drop off like conventional PMI).
Only way to remove it is to refinance it into a conventional loan once you qualify.