How to Cancel PMI: The 2026 Homeowner's Guide to Stopping the Extra Monthly Fee

If you bought a home with less than 20% down on a conventional loan, you're probably paying private mortgage insurance: an extra $1,500 to $2,500 per year that protects your lender, not you. The Homeowners Protection Act of 1998 sets out two main exits: a borrower-requested cancellation at 20% equity (subject to payment-history and value conditions), and an automatic termination the servicer is supposed to run at 22% equity scheduled LTV when you're current on payments. Many homeowners reach those thresholds years earlier than they realize, especially after the 2020–2024 run-up in home values. This guide walks through how the law works and how to put a clean request together.

What PMI actually is (and why you're paying it)

When you bought your home with less than 20% down, your lender almost certainly required you to buy private mortgage insurance, or PMI. It's an extra fee added to your monthly mortgage payment, usually between $30 and $70 per month for every $100,000 you borrowed.

On a $350,000 loan, that's roughly $1,260 to $2,940 a year.

Here's the part most homeowners don't realize: PMI does not protect you. It protects your mortgage company if you stop paying. You write the check, but if your home goes into foreclosure, the insurance pays them. You get nothing.

The U.S. Mortgage Insurers trade group reports that more than 800,000 homebuyers used private mortgage insurance to buy a home in 2024 alone, and that roughly 16% of all conventional mortgages issued from 2020 to 2022 carried PMI. If you bought during the pandemic-era housing boom with 3% to 15% down, you are almost certainly one of them.

The good news: PMI is not permanent. Federal law gives you a clear path to cancel it, and most homeowners can get rid of it years sooner than their mortgage company will tell them.

The federal law on your side: the Homeowners Protection Act

Before 1999, mortgage companies could keep charging PMI for the entire life of your loan if they wanted to. Congress fixed that with the Homeowners Protection Act of 1998 (HPA), also called the PMI Cancellation Act, codified at 12 U.S.C. §§ 4901–4910. It became effective July 29, 1999, and applies to almost every conventional mortgage on a primary residence taken out on or after that date.

The HPA creates three separate ways PMI must end. Knowing the difference between them is the single most valuable thing you can do as a homeowner paying PMI.

1. Borrower-requested cancellation at 80% LTV

You can submit a written request to your mortgage company to cancel PMI as soon as your loan balance reaches 80% of the home's original value. That means you have 20% equity based on what you originally paid (or the appraised value at closing, whichever was lower). Source: 12 U.S.C. § 4902(a).

Your mortgage company is required to cancel PMI if you meet four conditions:

1. You submit the request in writing.
2. You have a good payment history: no payment 30+ days late in the past 12 months, and no payment 60+ days late in months 13–24 before your request (12 U.S.C. § 4901(2)).
3. The home's value has not dropped below the original value (your servicer can require an appraisal to verify this).
4. There are no second mortgages or other junior liens on the property.

2. Automatic termination at 78% LTV

If you never ask, your mortgage company is legally required to cancel PMI on its own once your loan balance is scheduled to reach 78% of the original value based on the original amortization schedule, as long as you're current on payments (12 U.S.C. § 4902(b)).

When the conditions are met, this termination is supposed to happen without a request from you, without a fee, and without an appraisal. In practice, servicers sometimes miss the date or attempt to charge for a valuation; if that happens, you can put the issue in writing and cite § 4902(b).

The Consumer Financial Protection Bureau spelled this out clearly in its 2015 Compliance Bulletin (CFPB Bulletin 2015-03): "Servicers may not require a borrower to pay for a property valuation as a condition of automatic termination of PMI."

3. Final termination at the loan's midpoint

Even if neither of the above happens, your mortgage company must terminate PMI at the midpoint of your loan (month 181 of a 30-year mortgage, or month 91 of a 15-year mortgage), as long as you're current on payments (12 U.S.C. § 4902(c)).

This rule exists for loans where, for whatever reason (interest-only periods, balloon payments, missed equity), you haven't reached 78% LTV by the midpoint.

A real example: Sarah and Tom

Sarah and Tom bought a $325,000 home in 2021 with 5% down ($16,250) on a 30-year fixed at 3.25%. Their lender required PMI at 0.69% of the original loan amount per year.

• Loan amount: $308,750
• Monthly PMI: ~$178/month, or about $2,135 per year
• Years they'd pay PMI on the original schedule: about 9.5 years (until balance hits 78% of $325,000)
• Total PMI paid if they do nothing: roughly $20,300

By early 2026, their home has appreciated to about $410,000 (a typical mid-30s percentage increase for homes purchased in 2021, per the S&P CoreLogic Case-Shiller National Index). Their loan balance is around $282,000.

• Original-value LTV (HPA basis): $282,000 ÷ $325,000 = 86.8%. Not yet eligible for the 80% borrower-request right.
• Current-value LTV: $282,000 ÷ $410,000 = 68.8%. Well past 20% equity.

This is where the next set of rules comes in: the most underexplained part of PMI cancellation.

How to cancel PMI based on home appreciation

The HPA's 80%/78% rules use the home's original value. They never let you account for the fact that your home is worth a lot more now than when you bought it.

But Fannie Mae and Freddie Mac (the two government-sponsored enterprises that own or back the majority of conventional U.S. mortgages) have separate guidelines that do allow cancellation based on current appraised value, with stricter equity requirements and seasoning rules.

Here's the actual matrix (Fannie Mae Servicing Guide B-8.1-04; Freddie Mac Servicing Guide Section 8203.6):

In Sarah and Tom's case: they're about 4½ years from closing, so they need to be at 75% LTV based on current value. They're at 68.8%. They qualify.

If your home's value has climbed since you bought, see our guide on dropping PMI early using your home's current value — it walks through the appreciation math, the Fannie/Freddie LTV matrix, and how to structure the request.

The catch (and why you need to know it)

Appreciation-based cancellation is not the same as amortization-based cancellation. Three real differences your mortgage company will not volunteer:

1. You usually pay for the appraisal yourself. Most servicers charge $400–$600, or accept a Broker Price Opinion for $150–$300. The HPA only forbids them from charging for valuation in automatic termination at 78%, not in appreciation-based requests.
2. Your servicer picks the appraiser. You can't show up with a Zillow estimate or a Redfin printout. Online value tools (Automated Valuation Models, or AVMs) are useful for checking whether you're likely eligible before you spend appraisal money, but they are not the value the servicer will use.
3. Denial rates are higher. The CFPB documented in its 2015 Compliance Bulletin that some servicers wrongly apply investor LTV thresholds (such as 75%) to a borrower's HPA request, improperly denying valid 80% cancellation requests. If you're denied, the denial must be in writing and explain the reason (12 U.S.C. § 4902(a)(4)). Push back. Many improper denials get reversed.

If you bought between 2019 and 2022, your home likely appreciated 25%–45% before plateauing in 2024–2025. You may already qualify for appreciation-based cancellation and not know it.

How to cancel PMI: the step-by-step process

Step 1: Pull out your original closing documents

Find your PMI Disclosure (sometimes called the Initial Mortgage Insurance Disclosure). Your lender was required to give it to you at closing under 12 U.S.C. § 4903. It lists:

• Your home's "original value" (the contract sales price or closing appraisal, whichever was lower)
• The projected month your balance will reach 80% (your earliest borrower-request date)
• The projected month it will reach 78% (your automatic termination date)

If you can't find it, your servicer must send you a copy on request. The HPA also requires an annual PMI notice.

Step 2: Check your current loan balance

Look at your most recent monthly mortgage statement. The principal balance is what matters, not the remaining loan term.

Step 3: Calculate both LTV numbers

• Original-value LTV = current balance ÷ original value
• Current-value LTV = current balance ÷ today's estimated value

Use Zillow, Redfin, or Realtor.com for the second one. These are estimates, not appraisals. If all three put your home well above the threshold, you're probably eligible.

Step 4: Pick your path

Step 5: Send the request in writing

Verbal requests don't count under federal law. Send a letter by email if your servicer accepts written requests electronically, otherwise by certified mail with return receipt. Keep a copy. Include:

• Your loan number and property address
• A clear statement that you are requesting PMI cancellation under the Homeowners Protection Act of 1998
• Whether you're requesting based on the original-value 80% threshold or based on current appreciated value
• Your daytime contact information

Step 6: Track the 30-day clock

The HPA prohibits a servicer from collecting PMI premiums more than 30 days after a valid termination date or, in a borrower-requested cancellation, more than 30 days after the latter of: (a) the date your request was received, or (b) the date you satisfied any evidence requirements (12 U.S.C. § 4902(d)).

If your request is denied, the servicer must provide a written explanation. If your request is approved, any PMI premiums you paid for periods after the effective cancellation date must be refunded within 45 days (12 U.S.C. § 4902(f)).

Other ways to get rid of PMI faster

Pay down principal aggressively

Adding even $200/month to principal can move your borrower-request date forward by a year or more. Always tell your servicer in writing that the extra payment is to principal, not toward future payments.

Refinance, but do the math

If today's mortgage rates are at or below your current rate, refinancing into a new loan at 80% LTV or lower eliminates PMI immediately. But refinancing costs $3,000–$8,000 in closing costs in most markets. Cancelling PMI on your existing loan is almost always cheaper and faster than refinancing, unless you'd refinance anyway for the rate.

Make documented home improvements

If you've added square footage, renovated a kitchen, or finished a basement, Fannie Mae allows appreciation-based cancellation in less than 2 years from closing, as long as your loan balance is at or below 80% of the new appraised value and the value gain came from improvements. You'll need contractor receipts and an interior appraisal.

While we're talking about hidden mortgage costs: check your escrow

PMI isn't the only line item where homeowners overpay every month. If your mortgage payment includes property taxes and homeowners insurance, that money goes into an escrow account managed by your servicer.

Federal law (the Real Estate Settlement Procedures Act, implemented by Regulation X at 12 C.F.R. § 1024.17) requires your servicer to:

• Conduct an escrow analysis once a year
• Refund any surplus over $50 within 30 days of the analysis
• Limit the cushion they hold to two months' worth of escrow payments (or less, if your mortgage documents say so)

A 2024 LERETA homeowner survey found that roughly 60% of escrow service calls in 2023 were about shortages caused by rising taxes and insurance premiums, and that nearly half of homeowners surveyed didn't fully understand how their escrow account works. Errors run in both directions: servicers also routinely overestimate, sit on surpluses, and apply the cushion wrong.

If your monthly payment jumped this year because of an "escrow shortage," it's worth requesting your annual escrow analysis statement and double-checking the math. If a $50+ surplus exists and wasn't refunded within 30 days, the servicer is in violation of Regulation X.

What mortgage companies are required to do vs. what they actually do

Federal law is clear. Mortgage company behavior, often, is not.

CFPB examinations have repeatedly documented servicers:

• Applying the wrong LTV threshold (75% instead of 80%) and improperly denying valid HPA cancellation requests
• Requiring appraisals for automatic terminations (which is forbidden)
• Continuing to charge PMI premiums beyond the 30-day cutoff
• Failing to refund unearned premiums within the 45-day window
• Burying or omitting the annual PMI disclosure homeowners are entitled to

The pattern is consistent: the rules are favorable to homeowners; enforcement depends on homeowners knowing the rules and pushing back. Your mortgage company has no financial incentive to volunteer that you're eligible to cancel a fee that earns them money.

That's the gap this guide exists to close.

Want to know if you're in range to ask right now?

You can request PMI cancellation on your own using the steps above, and many homeowners successfully do. If you'd rather skip the math, TrueOwn offers a free PMI scan: we look at your loan, your home's likely current value, and the federal rules to tell you in plain English whether you appear to be in range to request cancellation and which path is most likely to succeed. Your mortgage company makes the final call.

We don't charge to run the numbers for you. There's no obligation. Your information is not sold.

The bottom line

You have more rights than your mortgage company is going to remind you about. PMI is one of the few homeownership costs that has a clear statutory exit (federal law says so). The only question is whether you let your servicer drop it on its slowest possible timeline, or whether you take the steps to drop it at the earliest legal date.

If you bought between 2019 and 2022 with less than 20% down, the math has almost certainly moved in your favor. The only thing standing between you and the savings is a written request and the rules you now know.

Sources

• Homeowners Protection Act of 1998, 12 U.S.C. §§ 4901–4910
• CFPB Compliance Bulletin 2015-03, Private Mortgage Insurance Cancellation and Termination
• Real Estate Settlement Procedures Act, Regulation X, 12 C.F.R. § 1024.17
• Consumer Financial Protection Bureau, Can I get rid of private mortgage insurance (PMI)?
• Fannie Mae Servicing Guide, B-8.1-04 (Termination of Conventional Mortgage Insurance)
• Freddie Mac Servicing Guide, Section 8203
• S&P CoreLogic Case-Shiller U.S. National Home Price Index

TrueOwn outputs are estimates and drafts, not legal or financial advice. Eligibility depends on your specific loan documents, your servicer's records, and your payment history. TrueOwn operates nationwide. Last reviewed: May 3, 2026.