How to Remove PMI from Your Mortgage and Save $200/Month

If you put less than 20% down on a conventional mortgage, you're almost certainly paying PMI — private mortgage insurance. This coverage protects the lender if you default, and it costs 0.5–1.5% of your loan amount annually. On a $350,000 loan, that's $1,750–$5,250 per year. The good news: PMI isn't forever.

The Automatic Cancellation Rule (Homeowners Protection Act)

Federal law requires lenders to automatically cancel PMI when your loan balance reaches 78% of the original purchase price — provided you're current on payments. For a $350,000 home with 5% down, you start at 95% LTV. PMI must be canceled when the balance reaches $273,000 (78% of $350,000).

Request Cancellation at 80% LTV

You don't have to wait for 78% automatic cancellation. You can request PMI removal when your balance hits 80% of the original value — two years earlier. You'll typically need a good payment history and a formal written request.

Cancel Early with a New Appraisal

If home values have risen significantly since you purchased, you may have reached 80% LTV faster than your amortization schedule shows. Request an appraisal (cost: $300–$600). If it confirms 80%+ equity based on current value, you can request early PMI removal.

FHA MIP Is Different — and Harder to Remove

FHA mortgage insurance premium (MIP) does not automatically cancel for loans originated after June 2013 with less than 10% down — it lasts the life of the loan. To get rid of FHA MIP, you need to refinance into a conventional loan once you have 20% equity.