How to Get Rid of PMI When Your Home Value Increases

If your home has gained value since you bought it, you can ask your mortgage servicer to cancel private mortgage insurance early rather than waiting for your loan balance to grind down on its own. The rules for how to get rid of PMI when your home value increases come from the servicing guidelines Fannie Mae and Freddie Mac apply to most conventional loans, and they turn on two things: how much equity you have at today’s appraised value, and how long you’ve held the mortgage.¹ PMI protects the lender, not you, and typically runs 0.5% to 1.5% of the original loan amount each year, so canceling it as soon as you qualify puts real money back in your pocket.²

The Equity Thresholds That Control Early Cancellation

The baseline rule under the Homeowners Protection Act lets you request cancellation once your loan balance hits 80% of the home’s original value.³ Appreciation gets you there faster, but only if you meet the tiered thresholds Fannie Mae and Freddie Mac use for cancellation based on current value. For single-family primary residences and second homes, those tiers are:¹

Loan less than 2 years old: appreciation alone is not enough. If you made substantial improvements (a kitchen or bath renovation, added square footage), the two-year minimum can be waived and the LTV must be 80% or less.
Loan 2 to 5 years old: LTV must be 75% or less. That means 25% equity at current value, not the 20% figure most people associate with PMI.
Loan more than 5 years old: LTV must be 80% or less.

Routine upkeep — repainting, roof repairs, replacing carpet — does not count toward waiving the two-year rule. The work has to meaningfully add livable space or marketability.¹

Multi-unit and investment properties face tighter thresholds. Fannie Mae requires 70% LTV or less with at least two years of seasoning on two-to-four-unit primary residences and one-to-four-unit investment properties. Freddie Mac drops that further to 65% LTV.¹

To check where you stand, divide your outstanding balance by your best estimate of today’s value. Recent comparable sales in your neighborhood are a reasonable proxy before you commit to paying for a formal appraisal.

If your loan is held in a lender’s own portfolio and never sold to Fannie Mae or Freddie Mac, these guidelines don’t govern; the lender’s own policy does. Ask your servicer which framework applies before you start gathering documents.

The Other Requirements Your Servicer Will Verify

Hitting the LTV number is necessary but not sufficient. Servicers also confirm three things before approving cancellation:⁴

No payments 30 or more days late in the past 12 months, and none 60 or more days late in the past 24 months.⁵
Fully current on the mortgage at the time you request cancellation.
No subordinate liens on the property. A HELOC with a zero balance can still count as an open lien, so confirm this with your servicer.³

One more caveat. If the market in your area rose and then fell, and your home is now worth less than when you closed, the servicer can deny the request even when the math on the loan balance looks fine.⁴ Check recent local sales before spending on an appraisal.

Making the Request

Send a written cancellation request to your servicer (the company you send payments to). Include your loan number, the property address, your estimate of current value, and a description of any improvements you’ve made since closing.¹ Certified mail with return receipt gives you a documented delivery date, which matters because federal deadlines run from when the servicer receives the request. Many servicers also accept the request through their online portal.

The Appraisal

Your servicer will not accept an appraisal you commissioned. They will order an independent appraisal or broker price opinion (BPO) at your expense. A standard single-family appraisal typically runs $300 to $600, varying by location and property complexity. A BPO, where a licensed real estate professional estimates value from comparable sales and a brief inspection, generally costs less, often between $50 and $250. Not every servicer offers the BPO option, so ask which they use when you submit the request.

Documenting Improvements

If you’re leaning on renovations to clear the two-year seasoning waiver or to push value higher, gather your evidence before the appraiser arrives. Receipts, contractor invoices, permits, and before-and-after photos all help. The appraiser will note what they see, but documentation makes sure nothing gets missed.

Timeline and Decision

Plan on 30 to 60 days for the servicer to arrange the appraisal and review your payment history. Keep paying your full mortgage bill, PMI included, during the review.

The servicer must send a written decision. If approved, they must stop collecting PMI no later than 30 days after the later of the date they received your written request or the date you satisfied all conditions (including the appraisal), and they must refund any unearned premiums within 45 days of cancellation.⁶

If denied, the servicer must explain why in writing.⁶ The typical reasons are a late payment inside the lookback window, a subordinate lien you didn’t clear, or an appraised value that fell short.

If Your Request Is Denied

A denial isn’t final. Read the servicer’s written explanation carefully, then look at the most common fixes:

Low appraised value. Ask whether you can order a second appraisal, especially if you can point to a missed comparable sale or an improvement the report didn’t reflect. Some servicers will consider it.
Late payment on file. Wait for it to age out of the lookback window (12 months for a 30-day late, 24 months for a 60-day late) and reapply.
Open subordinate lien. Paying off a HELOC or second mortgage and getting the lien released removes that barrier.

If you’ve met every requirement and the servicer still won’t cancel, file a complaint with the Consumer Financial Protection Bureau online or by calling (855) 411-2372.⁷ The CFPB forwards complaints to the servicer and tracks the response.

When These Rules Don’t Apply

The cancellation process above covers borrower-paid PMI on conventional loans. Three common situations sit outside it.

FHA Loans

FHA mortgage insurance premium (MIP) follows different rules. For FHA loans with a case number assigned on or after June 3, 2013, MIP cannot be canceled early if your down payment was under 10%; it stays for the life of the loan.⁸ With 10% or more down, MIP drops off after 11 years. Home appreciation does not shorten either timeline. For most FHA borrowers, refinancing into a conventional loan is the only way to eliminate mortgage insurance.

VA Loans

VA-backed loans carry no monthly mortgage insurance. Most borrowers pay a one-time funding fee at closing and have nothing ongoing to cancel.⁹

Lender-Paid PMI

Some loans use lender-paid PMI (LPMI), where the lender covers the insurance upfront and charges you a higher interest rate for the life of the loan. LPMI cannot be canceled, no matter how much equity you build.¹⁰ If your closing documents describe your mortgage insurance as lender-paid, refinancing is the only route to a lower effective cost.

Refinancing as an Alternative

Refinancing into a new conventional loan can drop mortgage insurance when the cancellation route won’t work. The new loan is underwritten to today’s appraised value, so if you have at least 20% equity, the replacement mortgage carries no PMI at all. Refinancing tends to make the most sense in three situations:

FHA borrowers whose homes have appreciated significantly — for most, this is the only way to shed MIP.
Loans with lender-paid PMI, since LPMI can’t be canceled and a new loan at current rates may cost less overall.
Loans less than two years old with no qualifying improvements, where seasoning blocks a current-value cancellation but appreciation is substantial.

Weigh the closing costs, appraisal fee, and any change in interest rate against the PMI you’d keep paying while waiting to qualify for cancellation. When the numbers work, the payback period is often a year or two.

1
Fannie Mae. Termination of Conventional Mortgage Insurance
2
Consumer Financial Protection Bureau. What Is Private Mortgage Insurance
3
Office of the Law Revision Counsel. 12 USC 4902 Termination of Private Mortgage Insurance
4
Consumer Financial Protection Bureau. When Can I Remove Private Mortgage Insurance PMI From My Loan
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Consumer Financial Protection Bureau. Homeowners Protection Act PMI Cancellation Act Procedures
6
Federal Reserve. Homeowners Protection Act Compliance Handbook
7
Consumer Financial Protection Bureau. Submit a Complaint
8
U.S. Department of Housing and Urban Development. Single Family Mortgage Insurance Premiums
9
VA News. Home Loan Borrowers Can Now Deduct Funding Fees
10
National Credit Union Administration. Homeowners Protection Act PMI Cancellation Act