First, know which kind of mortgage insurance you have
“PMI” and “MIP” get used interchangeably, but they are different, and the difference decides how you get rid of it.
PMI (private mortgage insurance) is on conventional loans when you put down less than 20%. It is cancellable — that is the whole point of this guide.
MIP (mortgage insurance premium) is on FHA loans. On most FHA loans with less than 10% down, MIP lasts the life of the loan, so it is generally not cancellable the way PMI is. The usual route to end FHA MIP is a refinance, covered below.
Removing PMI from a conventional loan
The Homeowners Protection Act of 1998 gives you specific rights here, so this is not up to your lender’s mood — it is law.
Request cancellation at 80% LTV
Once your loan balance drops to 80% of the home’s original value, you can ask your servicer in writing to cancel PMI. You generally need a good payment history and may need to confirm there are no other liens. You can reach 80% faster by paying down principal — and some borrowers get there sooner if the home’s value has risen, which your servicer may let you document with a new appraisal under its rules.
Automatic termination at 78% LTV
Even if you never ask, your servicer is required to automatically cancel PMI once your balance reaches 78% of the original value, based on your original payment schedule, as long as you are current. If you somehow reach the midpoint of your loan term without hitting 78%, PMI must come off then.
Refinancing to end mortgage insurance
A refinance replaces your current loan with a new one, and it is the most common way to end FHA MIP — and sometimes conventional PMI too. If your home has appreciated or you have paid down enough principal to have about 20% equity, you can refinance into a new conventional loan with no mortgage insurance at all.
The catch is that a refinance has its own closing costs, and it resets your loan. Whether it pays off depends on the math: what you save by dropping mortgage insurance (and any change in your loan) against what the refinance costs. For an FHA borrower whose MIP would otherwise last the life of the loan, that math often works once the equity is there — but it is worth running honestly, not assuming.
The fastest paths to 20% equity
Three things move you toward cancelling PMI: paying down your principal (extra payments shrink the balance), rising home values (which lift your equity without any payment), and time (your regular payments chip away at the balance on schedule). When you think you are close, your servicer’s PMI-cancellation process is the place to start for a conventional loan; for an FHA loan, a refinance conversation is the path. Either way, a licensed loan officer can tell you which one fits and whether the numbers work.
