Key Takeaways

1. For conventional loans, you can request PMI removal once you reach 20% equity based on your original purchase price or appraised value at closing.
2. Making extra principal payments of just $100 to $200 per month can cut 2 to 4 years off your PMI timeline, saving you thousands in cumulative fees.
3. If your home has appreciated significantly since purchase, you can use a new appraisal to prove 20% equity and remove PMI early, even if you haven’t paid down your original principal balance that far.
4. FHA loans require mortgage insurance premium (MIP) for the entire life of the loan for most borrowers who put less than 10% down; the only way to remove FHA MIP is to refinance into a non-FHA loan.
5. Automatic PMI cancellation is required by federal law (the Homeowners Protection Act of 1998) when your loan balance hits 78% of the original purchase price, regardless of current equity.
6. Always compare refinancing closing costs (typically 2% to 5% of your loan amount) to your total remaining PMI costs before choosing to refinance to remove PMI.