6 Things to Know Before Paying PMI
Private mortgage insurance can make a conventional mortgage possible with less equity, but it is an extra cost that protects the lender—not you. The important part is knowing what you are paying and when the rules let you stop.
Quick Answer
- PMI generally refers to private mortgage insurance on conventional loans and protects the lender.
- CFPB’s current guidance says borrowers on many covered mortgages can request cancellation when the principal balance is scheduled to reach 80% of the home’s original value if the required conditions are met.
- Automatic termination generally occurs when the scheduled balance reaches 78% of original value if the borrower is current.
- A separate midpoint termination rule can apply.
- FHA and VA loans have different requirements, so conventional PMI rules should not be applied to them.
1. PMI is not insurance for the homeowner
PMI protects the lender against part of the loss if a borrower defaults. It does not replace homeowners insurance, life insurance, or a personal emergency fund.
The actual PMI cost depends on the mortgage and borrower. Use your Loan Estimate and lender quote instead of relying on a generic internet percentage.
2. Find the actual PMI cost in your loan documents
The Loan Estimate shows projected payments and mortgage-insurance information.
When comparing a larger versus smaller down payment, compare the full transaction: cash needed, monthly payment, interest rate, mortgage insurance, and how much emergency cash remains afterward.
A larger down payment is not automatically better if it leaves you with no reserve.
3. The federal 80% threshold is generally a right to request cancellation
CFPB updated its PMI guidance on August 28, 2026.
For many covered mortgages on single-family principal residences, you can ask the servicer to cancel PMI on the date the principal balance is scheduled to reach 80% of the home’s original value. You may also be able to request earlier after extra principal payments reduce the balance to that level.
The servicer can require conditions including a written request, current payments, a good payment history, no disqualifying junior lien, and evidence that the property’s value has not declined below original value.
The federal statutory test uses “original value,” which generally means the lower of the purchase price or appraised value at purchase. A refinance uses a different original-value reference.
4. The 78% threshold is generally the automatic-termination rule
Even if you do not request cancellation, the servicer generally must automatically terminate PMI when the principal balance is scheduled to reach 78% of original value, provided you are current.
This is based on the scheduled balance, not simply today’s balance after home-price appreciation.
There is also a final-termination rule tied to the midpoint of the loan’s amortization schedule in applicable cases.
5. Appreciation can create a different cancellation path
Fannie Mae, Freddie Mac, and other investors or servicers can have their own cancellation standards based on current property value. Those rules can differ from the federal Homeowners Protection Act’s original-value framework.
Ask your servicer for its written requirements before paying for an appraisal or other valuation.
Do not order an appraisal first and ask the servicer later. Find out which valuation method the servicer will accept and who must order it.
6. FHA mortgage insurance is not conventional PMI
CFPB specifically notes that FHA and VA loans have different requirements.
If your mortgage is FHA-insured or VA-guaranteed, ask the servicer which program rules apply. Do not assume the conventional 80% request and 78% automatic-termination rules control your loan.
Before You Pay PMI Checklist
- Confirm whether the loan uses borrower-paid conventional PMI.
- Find the actual monthly or upfront mortgage-insurance cost.
- Locate the scheduled 80% and 78% dates.
- Ask the servicer for written cancellation requirements.
- Stay current and preserve payment records.
- Do not order a valuation until the servicer explains what it accepts.
- Use FHA- or VA-specific rules when applicable.
FAQ
Can I request PMI cancellation at 80%?
For many covered mortgages on principal residences, yes, if the statutory conditions are satisfied.
Does PMI automatically disappear at 80%?
Not under the basic federal framework. The 80% threshold is generally for borrower-requested cancellation; automatic termination generally uses the scheduled 78% threshold when the borrower is current.
Do the same rules apply to FHA mortgage insurance?
No. FHA and VA mortgages have different requirements.
Related Guides
The Bottom Line
If you have conventional PMI, do not assume you must pay it until the mortgage ends. Know the 80%, 78%, and midpoint rules, then ask your servicer whether an investor-specific current-value path could remove it earlier.