How to Get Rid of Private Mortgage Insurance (PMI)

PMI is a cost often added to your monthly mortgage payment if your down payment was less than 20% of the home's purchase price. It protects the lender, but it can be an extra financial burden to you. Here's how to eliminate it.

Reach 20% equity
PMI is typically required until your equity reaches 20%. You can get there by paying down your mortgage principal or if your home appreciates in value. Once you hit 20% equity, you can ask your lender to cancel PMI.

Schedule a professional appraisal
If you believe your home’s value has increased due to market conditions or renovations, you can request a professional appraisal. If the new value shows you own 20% or more of your home, provide the report to your lender to remove PMI.

Refinance your mortgage
If current interest rates are relatively low, refinancing can help eliminate PMI. A new loan with a loan-to-value ratio below 80% may allow you to bypass PMI.

Automatic cancellation at 22% equity
Federal law requires that lenders automatically cancel PMI when your equity reaches 22% of the original loan value, as long as you’re current on payments.

Maintain good payment history
A clean payment history is essential when requesting PMI removal. Late payments could delay approval.

Removing PMI can save you hundreds of dollars annually. Regularly monitor your mortgage balance and home value to identify when you’re eligible for cancellation. Processes will vary so review your lender’s specific requirements. By taking these steps, you can reduce your housing expenses and free up your budget.