When Does PMI Stop: At 78%, 80%, or Midpoint

Private mortgage insurance on a conventional loan stops at one of three points: automatically when your scheduled loan balance reaches 78 percent of the home’s original value, earlier at 80 percent if you request cancellation in writing, or at the midpoint of your loan term as a final backstop. So the short answer to when PMI stops is: as soon as you hit 78 or 80 percent equity based on original value and meet a few payment-history conditions, and no later than the halfway mark of your amortization. These rights come from the federal Homeowners Protection Act and apply to residential mortgages originated on or after July 29, 1999.

Automatic Termination at 78 Percent

Your servicer must stop charging PMI on the date your loan balance is first scheduled to reach 78 percent of your home’s original value, based on the amortization schedule you received at closing.¹ The trigger is the scheduled balance, not the actual balance, so extra principal payments do not move this date up. You do not need to file paperwork; the cancellation is automatic.

Original value means the lesser of your purchase price or the appraised value at closing. If you refinanced your primary residence, it means the appraised value your lender used to approve the refinance.¹

One condition applies: you must be current on payments when the date arrives. If you are behind, PMI ends on the first day of the month after you catch up.²

Requesting Early Cancellation at 80 Percent

You do not have to wait. Federal law lets you ask your servicer to cancel PMI once your balance reaches 80 percent of the original value, whether that happens on schedule or because you paid extra principal.¹ The request has to be in writing, and four conditions must be met:²

You submit the cancellation request in writing to your servicer.
You have a good payment history: no payment 30 or more days late in the 12 months immediately before the request, and no payment 60 or more days late during the 12-month window that began 24 months before the request.¹
You are current on your mortgage at the time of the request.
You provide evidence that the home’s value has not fallen below the original value, and you certify that no second mortgage, home equity line, or other junior lien has reduced your equity.

Your servicer will typically require a professional appraisal from an appraiser it approves to confirm current value. If the appraisal comes in low and your balance is not actually at 80 percent of the original value, the servicer can deny the request. At that point your choices are to pay down the balance to qualify or wait for automatic termination at 78 percent.

Removing PMI When Your Home Has Appreciated

The federal thresholds run off original value, but if your home has gained value since closing, investor guidelines may let you cancel earlier using current market value. Fannie Mae’s servicing rules, for a one-unit primary residence or second home, allow borrower-initiated removal at these current loan-to-value ratios:³

Loan seasoned two to five years: current LTV of 75 percent or less.
Loan seasoned more than five years: current LTV of 80 percent or less.
Investment properties or two-to-four-unit residences: LTV of 70 percent or less, and the loan must be more than two years old.

The same good-payment-history requirements apply, and you will still need an appraisal or broker price opinion to document current value. If the value comes back short, you can pay the balance down to reach the threshold.³

The Midpoint Backstop

Even if your scheduled balance never reaches 78 percent, PMI still has to end. Your servicer must terminate it on the first day of the month after the midpoint of your amortization period, provided you are current.² For a 30-year loan that midpoint falls at 15 years (180 months). For a 15-year loan, it falls at 7.5 years.

This matters mostly for loans that pay down principal slowly, such as those with interest-only periods or certain adjustable structures. If you are not current on the midpoint date, PMI ends on the first day of the month after you catch up.

When These Rules Don’t Apply

Not every mortgage follows the Homeowners Protection Act cancellation rules.

High-risk loans. Loans classified as high risk when originated are handled differently. Where the lender makes the risk determination, automatic termination happens at 77 percent of the original value rather than 78 percent — one extra percentage point of equity. The midpoint backstop still applies.² The standard 80 percent borrower-request right does not apply.

FHA loans. FHA loans carry a mortgage insurance premium, not PMI. For FHA loans originated after June 3, 2013, MIP lasts the life of the loan if you put down less than 10 percent; with 10 percent or more down, it drops off after 11 years. There is no equity-based cancellation.

VA loans. VA-backed loans do not require monthly mortgage insurance at all; the cost sits in an upfront funding fee at closing.⁴

USDA loans. USDA rural development loans charge an annual guarantee fee — up to 0.5 percent of the average annual unpaid principal balance — that lasts for the life of the loan.⁵ Refinancing is the only way out.

Lender-paid mortgage insurance. If you have LPMI, the lender bought the policy and built the cost into your interest rate. LPMI cannot be cancelled by the borrower and is not covered by the Homeowners Protection Act’s cancellation provisions.⁶ It ends only when you refinance or pay off the loan.

Refunds and Payment Changes After PMI Ends

Once PMI is cancelled or terminated, your servicer must return any unearned premiums to you within 45 days.² If the mortgage insurer is holding unearned premiums, it has 30 days after being notified to transfer them to your servicer, which then passes them to you.

Your monthly payment should drop by the amount that was being collected for PMI.³ Some servicers run a new escrow analysis right away; others roll the change into your next annual review. If your escrow already has a surplus from PMI collected, you’ll see either a refund or a lower payment going forward.

If Your Servicer Won’t Remove PMI

Your servicer is required to send you an annual written statement reminding you of your cancellation and termination rights, with contact information for making a request.⁷ If PMI does not come off when it should, start by writing to your servicer and citing the specific provision that applies. Send it certified or through a documented electronic channel so you have proof.

If the servicer refuses or does not respond, you can file a complaint with the Consumer Financial Protection Bureau at consumerfinance.gov. The law also gives you a right to sue. A servicer that violates the Homeowners Protection Act is liable to the borrower for actual damages, including interest from the date the violation began, plus up to $2,000 in statutory damages in an individual action, along with attorney fees and court costs.⁸ Federal enforcement can also require the servicer to reimburse all premiums collected after PMI should have ended and correct your account. You have to bring any legal action within two years of discovering the violation.

1
Office of the Law Revision Counsel. 12 USC 4901 Definitions
2
Office of the Law Revision Counsel. 12 USC 4902 Termination of Private Mortgage Insurance
3
Fannie Mae. Termination of Conventional Mortgage Insurance
4
Veterans Affairs. Purchase Loan
5
eCFR. Part 3555 Guaranteed Rural Housing Program
6
NCUA. Homeowners Protection Act (PMI Cancellation Act)
7
Office of the Law Revision Counsel. 12 USC 4903 Disclosure Requirements
8
Office of the Law Revision Counsel. 12 USC Chapter 49 Homeowners Protection