Private mortgage insurance — PMI — is the extra monthly charge many homeowners pay when they buy with a small down payment. It protects the lender, not you, and it can add $100 or more to your monthly payment. The good news is that PMI is not forever, and you do not need to refinance to get rid of it.
This guide covers four proven ways to remove PMI without refinancing, who qualifies for each one, and the steps to take so you stop paying sooner.
A Quick Refresher: What Is PMI?
PMI is insurance that lenders usually require on conventional loans when your down payment is less than 20% of the home's price. It protects the lender if you stop paying the mortgage. It does not protect you, and it does not build equity.
PMI typically costs between 0.5% and 1% of the loan amount per year, divided into monthly payments. On a $300,000 loan, that could be $125 to $250 extra every month.
The key number to remember is 20% equity — meaning you owe 80% or less of the home's value. That is the threshold where PMI can usually be removed.
Way 1: Pay Down to 20% Equity and Request Cancellation
This is the most common path. Once your loan balance drops to 80% of your home's original value, you have the right to ask your loan servicer to cancel PMI.
How it works:
- Track your loan balance. Your mortgage statement shows what you owe. Divide the balance by your home's original purchase price (or appraised value at purchase, whichever the lender used). When the result is 0.80 or less, you have 20% equity.
- Contact your servicer in writing. Call first to confirm their process, then submit a formal written request for PMI cancellation.
- Meet the requirements. Your servicer will typically require that your payments are current and you have a good payment history (often no late payments in the last 12 months).
- Get a home valuation if needed. The servicer may order a broker price opinion or appraisal to confirm the home's value. You may have to pay for it, usually a few hundred dollars.
- It is based on the original payment schedule, not your actual balance. Extra payments do not move the automatic date earlier.
- Your loan must be current — if you are behind on payments, cancellation is delayed until you catch up.
- Check recent comparable sales in your neighborhood to see if your home's value has likely risen enough.
- Contact your servicer and ask about PMI removal based on a new appraisal. Confirm what type of valuation they accept.
- Order the appraisal through the servicer's approved process. Expect to pay a few hundred dollars.
- Submit the results with your written cancellation request.
- Focus on high-value projects with broad appeal, not personal taste.
- Keep receipts and before/after documentation to show the appraiser.
- Just asking nicely before you have 20% equity. Servicers follow the rules; the equity threshold is firm.
- Switching to biweekly payments alone. This pays the loan down a bit faster, which helps you reach 20% sooner, but it does not remove PMI by itself.
- Assuming PMI drops off at 20% automatically. The automatic trigger is 78% on the original schedule — you have to request cancellation at 80%.
- Find your current loan balance on your mortgage statement.
- Divide it by your home's original value. If the result is 0.80 or below, request cancellation now.
- If it is above 0.80, check whether rising home values or improvements could get you there with a new appraisal.
- If neither works yet, make extra principal payments to reach 20% faster — or simply wait for automatic termination at 78%.
One important detail: the "original value" rule. For cancellation by request, most servicers compare your balance to the home's value when you bought it — not today's market value. If home prices in your area have risen, this can work in your favor. But if your home lost value, reaching 80% of the original value takes longer.
Making extra principal payments is the fastest way to reach 20% equity on this path. Even modest extra payments shorten the timeline noticeably.
Way 2: Wait for Automatic Termination
If you do nothing, PMI still ends on its own — eventually. By law, on most conventional loans, the servicer must automatically cancel PMI when your loan balance is scheduled to reach 78% of the original home value, based on the original amortization schedule.
A few things to know about automatic termination:
Automatic termination is the slowest option, but it is a guaranteed backstop. If you are already close to 78% on your regular schedule, it may not be worth paying for an appraisal to cancel a few months early. But if you are years away, requesting cancellation (Way 1) or one of the methods below will save you much more.
Way 3: Get a New Appraisal Showing 20% Equity
This is the fastest way for many homeowners, especially in rising markets. If your home has gone up in value, you may already have 20% equity even if your loan balance has not dropped much.
Example: you bought a home for $300,000 with 10% down, so you borrowed $270,000. Two years later, similar homes are selling for $350,000. Your balance is now about $260,000 — which is roughly 74% of the new $350,000 value. You have more than 20% equity based on current value.
The process:
A caution: if the appraisal comes in lower than you hoped, you are out the appraisal fee and PMI stays. So do your homework on comparable sales first. Also note that some servicers require you to have owned the home for a minimum time — often two years — before they will consider a value-based cancellation, and they may require a higher equity cushion (such as 25%) if you have owned it less than five years.
Way 4: Make Home Improvements That Raise the Value
Renovations that genuinely increase your home's market value can push you over the 20% equity line, and you can then use a new appraisal (like Way 3) to prove it.
This works best with improvements that appraisers and buyers actually value: an updated kitchen or bathroom, added square footage, a new roof, or major systems upgrades. Cosmetic touch-ups alone rarely move an appraisal much.
The smart approach:
Be realistic about the math. If you need $20,000 more in home value to hit 20% equity, a $30,000 renovation just to drop PMI rarely pays for itself. This method makes most sense when you were planning improvements anyway — the PMI removal becomes a bonus.
What Does Not Work
A few things people try that generally do not remove PMI on a conventional loan:
Also note: these rules apply to conventional loans. FHA loans have their own mortgage insurance rules (MIP), which work differently and often cannot be removed without refinancing into a conventional loan. If you have an FHA loan, check your loan type before following this guide.
How Much Can You Save?
PMI commonly costs 0.5% to 1% of the loan balance per year. On a $280,000 balance at 0.75%, that is about $175 per month — or $2,100 per year. Removing PMI even one year early puts real money back in your pocket. Removing it three years early can save over $6,000.
Weigh any upfront cost, like an appraisal fee of a few hundred dollars, against those monthly savings. In most cases the appraisal pays for itself within a few months.
Your Action Plan
FAQ
Q: Can PMI be removed without refinancing?
A: Yes. On a conventional loan you can request cancellation at 20% equity, wait for automatic termination at 78%, or use a new appraisal to prove 20% equity based on current value.
Q: How do I know if I have 20% equity?
A: Divide your current loan balance by your home's original value. If the answer is 0.80 or less, you have at least 20% equity. For a value-based request, use a current appraisal instead of the original value.
Q: How long does PMI cancellation take?
A: Once you submit a complete request, servicers typically process it within about 30 days, though timelines vary. If an appraisal is needed, add the time to schedule and receive it.
Q: Does making extra payments remove PMI faster?
A: Yes. Extra principal payments lower your balance faster, so you reach the 20% equity threshold sooner and can request cancellation earlier.
Q: What if my home's value went down?
A: Then reaching 20% of the original value takes longer, since cancellation is measured against the original value. In that case, extra principal payments are your main lever until values recover.
Disclaimer: This content is for general educational purposes only and is not professional financial advice.
