Private mortgage insurance protects the lender, not you, and you pay for it every month until you get rid of it. On a conventional loan there are three routes off: it cancels automatically, you request cancellation early, or you refinance out of it.

Most borrowers pay it for longer than they need to, simply because the automatic route is the slowest one and nobody tells you the faster routes exist.

The two thresholds that matter

Federal law gives conventional borrowers two distinct rights, and the difference between them is worth real money.

Automatic termination at 78% LTV. Your servicer must cancel PMI, without you asking, once your loan balance is scheduled to reach 78% of the property's original value. You have to be current on payments. This happens on its own, on a date determined at closing by your amortization schedule.

Borrower-requested cancellation at 80% LTV. You can ask for cancellation once the balance reaches 80% of original value. It isn't automatic — you must request it, typically in writing.

That 2% gap is not trivial. Depending on your loan size and rate, reaching 78% by scheduled amortization alone can take a year or more longer than reaching 80%. Every month in between is PMI you didn't have to pay.

There's also a backstop: PMI must end by the midpoint of the loan term — year 15 of a 30-year loan — if you're current, regardless of the balance.

"Original value" is the catch

Both thresholds are measured against the original value — generally the lesser of the purchase price or the appraised value at closing. Not today's market value.

This matters enormously in a rising market. Your house might be worth far more than you paid, putting your real equity well past 20% — but the automatic and requested cancellation rights still measure against the old number. Appreciation alone does not trigger them.

To get credit for appreciation you generally have to go through your servicer's own policy for removal based on current value, which typically requires a new appraisal you pay for, and often a minimum seasoning period since closing. Servicers set these rules themselves, so they vary — ask yours specifically.

How to get there faster

  • Pay down principal deliberately. Extra payments applied to principal move you to 80% sooner. This is the most reliable lever you control — see our guide on paying off your mortgage early.
  • Request at 80% — don't wait for 78%. Work out from your amortization schedule when the balance crosses 80% of original value, and contact the servicer then.
  • Ask about value-based removal if your area has appreciated meaningfully. An appraisal fee can pay for itself quickly if it removes a monthly premium.
  • Count improvements. Substantial renovations can support a higher appraised value under a value-based request.
  • Refinance if you have 20%+ equity at current value and rates make sense. This exits PMI entirely, though closing costs mean it has to be worth it on the rate too.

What the servicer requires

For a request at 80%, expect the servicer to check that you're current, that you have a satisfactory payment history, and that no second lien sits behind the mortgage. For value-based requests they will usually order or require an appraisal from their own approved list — you generally can't supply your own.

Put requests in writing and keep a record. If a servicer declines, ask which specific condition wasn't met; the answer is often something fixable, like waiting out a seasoning period.

FHA is a different regime entirely

This is the single most important distinction in this guide, and it catches a lot of people.

FHA loans don't carry PMI. They carry MIP — a mortgage insurance premium paid to the government — and the cancellation rules are not the same. On most modern FHA loans with a low down payment, MIP lasts for the life of the loan. It does not fall away at 78% or 80%. Where the down payment was larger, MIP may end after a set number of years instead.

So the standard route out of FHA mortgage insurance is not cancellation — it's refinancing into a conventional loan once you have enough equity. That's a real transaction with real closing costs, so it needs to be planned rather than assumed.

If you have an FHA loan and you've been waiting for insurance to drop off automatically, check your specific terms. You may be waiting indefinitely.

Is PMI actually bad?

Worth a moment of perspective. PMI lets you buy with less than 20% down, which for many buyers is the difference between owning now and saving for several more years. In a rising market, waiting has its own cost.

The sensible framing isn't "avoid PMI at all costs" — it's "know exactly what it costs, and have a plan to remove it". A borrower who buys with 10% down, knows their 80% date, and requests cancellation on schedule has used PMI as intended. One who buys with 10% down and never thinks about it again pays for years longer than necessary.

The bottom line

On a conventional loan, PMI cancels automatically at 78% of original value and can be cancelled on request at 80% — request it, don't wait. Both are measured against the value at closing, so appreciation only helps through your servicer's value-based process, usually with a new appraisal.

FHA MIP is a different product with different rules and frequently doesn't cancel at all, in which case refinancing is the exit.

Work out your 80% date from your amortization schedule now, and put a reminder in your calendar. It's one of the few pieces of mortgage admin with a guaranteed payoff. Our down payment and PMI guide covers how much to put down in the first place.