Whether you need an appraisal to remove PMI depends entirely on which exit you take. If you're waiting for automatic termination at 78% of your home's original price, you need nothing: the servicer drops it on schedule. But if you want to cancel early because your home is worth more than you paid, an appraisal is required, your servicer orders it, and you pay for it. Here's how that works and what it costs.
Check if you're in range first with the free PMI calculatorWhen you need an appraisal, and when you don't
There are four ways PMI comes off a conventional loan, and only some of them involve an appraisal. The difference comes down to one thing: whether the servicer already knows your value, or has to go measure it.
| How PMI ends | Appraisal needed? | Who pays |
|---|---|---|
| Automatic termination at 78% of original value | No | Nobody |
| Request at 80% of original value | Usually not; servicer may ask for proof value hasn't fallen | You, if required |
| Request based on current (higher) value | Yes | You |
| Refinance out of PMI | Yes, a standard refinance appraisal | You, in closing costs |
The first two paths use your home's original value, the price you paid or the appraisal from when you closed. Your servicer, the company you send your monthly mortgage payment to (which may not be the lender you originally borrowed from), already has that number and just watches your balance fall toward it. No new appraisal needed.
The third path is the one people ask about, and it's the reason this article exists. Canceling early because your home appreciated means the servicer has to confirm what it's worth today, and the only way to do that is a fresh valuation.
Why the current-value path needs one (and the others don't)
Here's a detail almost no one explains correctly. Canceling PMI based on your home's increased value isn't actually a right under the Homeowners Protection Act. The HPA is built around your original value: automatic termination at 78% and a borrower request at 80% both measure against what the home was worth when you bought it.
The current-value option comes from somewhere else: the servicing rules set by Fannie Mae and Freddie Mac, who own or back most conventional loans. Per Fannie Mae Servicing Guide B-8.1-04, the servicer "must only terminate MI based on current value of the property in response to a borrower-initiated request," and it has to verify that value "based on an inspection of both the interior and exterior of the property."
That's why the appraisal exists. The investor's rules let you use today's value, but they make the servicer prove it with an inspection. The CFPB notes that even on the original-value request, the servicer can require "evidence (for example, an appraisal) that the value of your property hasn't declined below the original value."
Who orders it: you can't bring your own
The valuation has to come through the servicer. Fannie's and Freddie's rules require the servicer to order it so it controls who the appraiser is and how the inspection is done. An appraisal you commission on your own won't be accepted to cancel PMI.
That doesn't mean a private appraisal is useless. Paying for one yourself first is a reasonable gut-check: if your own appraiser comes in well above the threshold, you can request cancellation knowing you're likely in range. But the servicer will still order its own valuation before it drops the coverage, so you may end up paying twice. For most people it's cheaper to use the PMI calculator for a free estimate first, then go straight to the servicer's appraisal.
What it costs and who pays
In practice, you pay. The Fannie and Freddie guides put the duty to order the valuation on the servicer, but the cost is passed to you, the borrower, and neither the federal law nor the servicing rules cap it. The CFPB's own guidance says you "may be required to pay for the appraisal." Ask for the exact fee in writing before you request cancellation.
In practice it's commonly a few hundred dollars. The amount depends on which kind of valuation the servicer chooses:
- A full appraisal with an interior and exterior inspection is the most thorough and the most expensive.
- A broker price opinion (BPO) is usually cheaper because it's prepared by a real estate agent rather than a state-licensed appraiser, and is generally considered less rigorous. But for a current-value cancellation the servicer requires either type to include a full interior-and-exterior inspection, so the inspection standard is the same.
The servicer picks the method, not you. Either way, run the math against your PMI bill. If you're paying $150 a month and a $500 appraisal removes it, you've recovered the cost in under four months and saved every month after that.
The number the appraisal has to hit
An appraisal only helps if it comes in high enough to drop your loan-to-value ratio under the limit. Your loan-to-value ratio (LTV) just compares what you owe to what the home is worth: owe $240,000 on a $320,000 home and your LTV is 75%, and lower is better. Those limits depend on how long you've had the loan:
| Loan age | Your balance must be |
|---|---|
| 2 to 5 years | 75% or less of the new appraised value |
| More than 5 years | 80% or less of the new appraised value |
| Substantial improvements made | 80% or less, as early as year 2 |
You also have to be current on the loan, with no payment 30 or more days late in the last 12 months and none 60 or more days late in the last 24. The full eligibility math, including how appreciation moves your LTV, is in our guide on dropping PMI using your home's rising value.
Before you order anything, estimate where you stand. Take your current loan balance and divide it by a realistic value for your home. If that's already under 75%, an appraisal is worth ordering. If it's at 82%, you're not there yet and the appraisal fee would be wasted.
What to do if the appraisal comes in low
This is the real risk: you pay for the appraisal, it comes in below what you hoped, the servicer denies the request, and the fee is gone. There's no automatic appeal, and servicers rarely reorder a second valuation on request.
If that happens, you have three moves:
- Wait and retry. Values keep moving and your balance keeps falling. In a rising market, six or twelve months can be the difference. Keep an eye on comparable sales in your neighborhood before you reorder.
- Pay the balance down to the threshold. If the appraisal showed you're close, a lump-sum principal payment can bridge the gap and get you under the LTV line now.
- Ride it out to automatic termination. At 78% of your original price, PMI comes off with no request and no appraisal. If you're within a year or two of that point, it may not be worth paying for a valuation at all.
How to prepare for the appraisal
You can't choose the appraiser, but you can make sure they see the home at its best and have the data to support a strong value:
- Pull three to five recent comparable sales in your neighborhood, ideally homes like yours sold in the last few months, and have them ready to hand the appraiser.
- List every improvement you've made since you bought: a renovated kitchen, a new roof, an added bathroom. Documented upgrades are also what unlock the early year-2 threshold under the improvements rule.
- Handle the small stuff. Clean, declutter, and fix obvious deferred maintenance. It won't manufacture value, but a well-kept home supports the top of a reasonable range rather than the bottom.
The bottom line
You don't always need an appraisal to remove PMI. The automatic and original-value exits run off numbers your servicer already has. You only need one to cancel early on your home's current, higher value, and that requirement comes from Fannie Mae and Freddie Mac, not the HPA, which is why the servicer orders the appraisal and you pay for it. Check your estimated LTV first, confirm the fee with your servicer in writing, and only order the appraisal once you're confident you're under the threshold. When you're ready to send the request, our PMI cancellation letter template has the exact language, and the full PMI cancellation walkthrough covers the rest of the process.
Estimate your LTV with the free PMI removal calculatorSources
- Fannie Mae, Servicing Guide B-8.1-04: Termination of Conventional Mortgage Insurance
- Freddie Mac, Servicing Guide Chapter 8203: Cancellation and Termination of Mortgage Insurance
- Consumer Financial Protection Bureau, Can I get rid of private mortgage insurance (PMI)?
- Homeowners Protection Act of 1998, 12 U.S.C. § 4901–4910
Frequently asked questions
Do you need an appraisal to remove PMI?
It depends on the exit. Automatic termination at 78% of your original purchase price needs no appraisal: the servicer just tracks your amortization schedule. Canceling early based on your home's current, higher value does require one, because the servicer has to verify today's value. A request at 80% of the original price usually doesn't need a full appraisal, though the servicer can ask for evidence the value hasn't dropped.
Who pays for the appraisal to remove PMI?
You do. The Fannie Mae and Freddie Mac servicing rules require the servicer to order the valuation, but the cost is passed to you, the borrower. Ask your servicer for the exact fee before you request cancellation so you can weigh it against the PMI you'd save. On a payment of $100 to $200 a month, a few hundred dollars in appraisal cost usually pays for itself within a few months.
Can I order my own appraisal to cancel PMI?
No. The servicer has to order the valuation through its own process so it controls the appraiser selection and the inspection standard. An appraisal you commission yourself won't be accepted for a current-value cancellation. You can pay for your own appraisal first as a private gut-check on whether you're in range, but the servicer will still order its own before it drops PMI.
How much does a PMI removal appraisal cost?
Commonly a few hundred dollars. A full interior-and-exterior appraisal typically runs more than a broker price opinion, and the servicer decides which one it orders. The exact charge comes from your servicer, so ask in writing before you commit. Weigh it against your monthly PMI: if you're paying $150 a month, even a $500 appraisal is recovered in under four months once PMI is gone.
What value does the appraisal have to hit to cancel PMI?
Under Fannie Mae and Freddie Mac rules, your loan balance must be 75% or less of the new appraised value if your loan is two to five years old, or 80% or less if it's more than five years old. If you've made substantial improvements, the 80% threshold can apply as early as the second year. You also have to be current on payments with no recent late marks.
What happens if the PMI appraisal comes in too low?
If the appraised value isn't high enough to put you under the required LTV, the servicer denies the request and you've still paid for the appraisal. Your options are to wait for more appreciation or principal paydown and try again later, pay the balance down to the threshold now, or keep making payments toward automatic termination at 78% of the original price, which needs no appraisal at all.
Do I need an appraisal for automatic PMI termination?
No. Automatic termination happens when your balance is scheduled to reach 78% of the home's original value, based purely on your loan's amortization schedule. The servicer must drop PMI on its own, with no request, no fee, and no appraisal. That automatic cutoff is different from asking to cancel early: the servicer has to do automatic termination on its own, but a request based on your home's current value is something it evaluates and can deny. The appraisal only enters the picture on that current-value request.