🚫 How to Remove PMI from Your Mortgage

What Is PMI and Why Do You Pay It?

PMI protects lenders if you default on a conventional loan with less than 20% down. It typically costs 0.3-1.5% of loan amount annually, added to your monthly payment.

When Can You Remove PMI?

You can request PMI removal when you reach 20% equity based on original property value. PMI automatically cancels at 22% equity (78% loan-to-value).

Building Equity to Remove PMI

Make extra principal payments, improve home value through renovations, or wait for property values to increase. Any combination helps you reach 20% equity faster.

Requesting PMI Cancellation

Contact your loan servicer in writing when you reach 20% equity. You may need a new appraisal (at your expense) to prove current value supports the LTV requirement.

PMI Removal Through Home Improvements

Strategic renovations can increase home value and help you reach 20% equity. Kitchen and bathroom updates typically offer best ROI. Get appraisal after improvements.

Refinancing to Remove PMI

If home value has increased significantly, refinance into a new loan with 20% equity. Compare closing costs to PMI savings to ensure it makes financial sense.

PMI vs MIP: Know the Difference

PMI is for conventional loans and can be removed. MIP (Mortgage Insurance Premium) is for FHA loans and typically lasts the life of the loan with less than 10% down.

Calculating PMI Savings

If you pay $150/month in PMI and can remove it by paying $5,000 in closing costs to refinance, break-even is 33 months. Factor in how long you'll stay in the home.

Avoiding PMI When Buying

Save for 20% down payment, use piggyback loan (80/10/10 or 80/15/5), or consider lender-paid PMI (slightly higher rate but no monthly PMI).

Common PMI Removal Mistakes

Don't forget to request cancellation (it's not always automatic). Don't refinance without calculating break-even. Don't forget that home value fluctuations affect LTV.