How to Remove PMI from Your Mortgage

The best way to remove PMI, or private mortgage insurance, is to build equity in your home by paying down the principal on your conventional mortgage.
Written by Matt Nightingale
Reviewed by Melanie Reiff
Updated on Jun 01, 2022
The best way to remove PMI, or private mortgage insurance, is to build equity in your home by paying down the principal on your conventional mortgage. If you don’t have a conventional mortgage, you may need to meet more stringent requirements. 
PMI can be a big drain on your wallet—it usually costs hundreds of dollars per month and doesn’t protect you, but your lender. Fortunately, there are ways to eliminate PMI from your mortgage. 
In this article, the car and
home insurance
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has compiled everything you need to know about how to remove PMI from your mortgage.
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What is PMI?

PMI is a type of insurance that protects mortgage lenders in higher-risk situations. 
Borrowers with lower down payments are considered to be at higher risk of defaulting on their mortgages. If you want to get a mortgage with a down payment of less than 20%, your lender will probably require you to get PMI as a form of added security for them. 
The amount you’ll pay for PMI is based on a few factors such as your down payment, credit score, and loan term, but it can add up to hundreds of dollars per month.
PMI doesn’t apply to all high-risk mortgages. Government-backed FHA loans, for instance,  require you to pay a mortgage insurance premium (MIP) instead of PMI. While similar to PMI, MIP must be paid for the entire duration of the loan if your down payment was less than 10%
That still doesn’t mean you’re necessarily stuck with MIP forever. You can ditch the FHA loan (and thus the MIP) by refinancing into a conventional loan down the road. To do this, you’ll need to have paid down the loan to 78% of the home’s value.

Types of PMI

There are two types of PMI: buyer-paid (BPMI) and lender-paid (LPMI). Both have their advantages and disadvantages—and both can be removed once you meet certain criteria. Here’s a breakdown of these two types of mortgage insurance.


The most common type is buyer-paid private mortgage insurance, or BPMI. BPMI is an added charge that you pay each time you make your monthly mortgage payment. 
By law, a lender must automatically cancel BPMI once the
loan-to-value ratio (LTV)
of your mortgage falls to 78%.
You can ditch your BPMI by
building equity
in your home. As you build equity, the LTV declines. Once you reach 22% equity—and the LTV hits 78%—your BPMI will automatically be terminated.
Per the federal Homeowners Protection Act, mortgage lenders must cancel BPMI once mortgage holders have built 22% equity on their home (based on the original purchase price).
Your BPMI may automatically cancel, but there’s one drawback: your monthly payments will be higher than a loan with LPMI, which can’t be canceled (keep reading to review LPMI). 
Key Takeaway BPMI automatically cancels once your LTV falls to 78%, but your monthly payments will be higher for the duration of your PMI. 


The other type of PMI is lender-paid private mortgage insurance, or LPMI.
Many people who have LPMI don’t know it because LPMI doesn’t show up as an additional monthly charge (as BPMI does). 
Instead, LPMI is added to your loan by the lender in the form of a higher interest rate—say an extra 1%-2%. The lender uses that extra money to purchase PMI for your mortgage.
The advantage to LPMI is that even with the higher interest rate, your monthly payments could still be lower than if you had BPMI.
However, because LPMI is built into the loan, it cannot be canceled. So, if you get a mortgage with LPMI, you’re stuck with it for the life of the loan.
But that doesn’t mean you’re stuck with that loan for the rest of your life. If you’ve built 20% equity in your home, you could potentially refinance into a new loan that doesn’t require PMI. This move makes the most sense if your home has increased in value since you got your mortgage.
Key Takeaway LPMI cannot be canceled unless you refinance into a different loan. However, your monthly payments with LPMI may be lower than with BPMI. 

Four ways to get rid of PMI

Now that you know what PMI is, you’re probably wondering how to remove it from your loan once you’re eligible. Here are a few ways you can get rid of your PMI payments as soon as possible.

Pay down your principal

Once you’ve paid your mortgage principal down to 78%, your lender is required by law to cancel your BPMI
You can speed up this process by making extra payments to get your mortgage principal down to 78%
ahead of schedule
. Just make sure that your extra payments don’t affect your ability to pay bills on time or cut into your emergency savings!

Request to have PMI removed

When you reach 20% equity in your home, you can request that your lender remove PMI from your mortgage. 
As long as you haven't missed your regular payments and there are no
on your house, your lender should consider you a lower risk and cancel your PMI payments. (You can reach the 20% mark faster by making extra payments if you have the money, as discussed above.) 
However, the decision to cancel PMI is ultimately in the hands of your lender, since they are the party benefiting from having PMI in place.

Refinance the mortgage

Another way you can get rid of PMI is to refinance your mortgage.
makes the most sense if your home has increased in value substantially since you got your mortgage. If that is the case, you might be able to get rid of PMI if your new mortgage balance is less than 80% of your home’s value.
Keep in mind that you do not have to stay with your current lender. You are free to shop around and refinance with any lender willing to work with you. 
You’ll want to be careful using this strategy, though. If property values have dropped, refinancing could have the opposite effect—and you could find yourself refinancing into a mortgage with PMI, even if you didn’t have PMI previously.
Before you refinance, make sure you can afford the new payments. Paying off your mortgage faster is always nice, but you shouldn’t sacrifice your long-term savings to do so. 
Key Takeaway If your home has increased in value since you took out your mortgage, refinancing may allow you to ditch PMI.

Reappraise your home

If the real estate market is booming in your area, having your home reappraised could help you reach 20% equity faster. To do this, you’ll need to have owned your home for at least two years and your loan balance must be no more than 75% of the new valuation. If you’ve owned the house for at least five years, your loan balance must be no more than 80% of the new valuation. 
If you meet either of these criteria, you might be able to have your PMI dropped. However, the cancellation is still at the lender’s discretion.

Mortgage insurance vs. home insurance

It is very important to understand that mortgage insurance, such as PMI, is not the same thing as home insurance. PMI protects your lender if you cannot make your mortgage payments. PMI does not protect your home from damages or theft. 
For that, you’ll need a
homeowners insurance policy (
which your mortgage lender probably requires anway).
Homeowners insurance covers things such as structural damage to your home, loss of use, liability, and medical payments. Some policies cover only damage to your main dwelling, while other policies cover your main dwelling, your personal property, and secondary structures like a garage. 
The types of
that homeowners insurance protects against will vary from policy to policy as well.
Homeowners insurance is not included in your mortgage payments and you cannot get rid of it as you can PMI. Most mortgage lenders require you to have homeowners insurance for the duration of the loan.
Key Takeaway Mortgage insurance does not protect your home from damage and theft. That’s why you should invest in a protective homeowners insurance policy.

How to find affordable home insurance

Finding great home insurance can be a time-consuming process, but remember: the cheapest coverage is not always the best coverage, and it’s well worth the effort to shop around for the best quotes.
If you’d rather leave the hard work of gathering quotes to someone else, use
. The Jerry app can collect quotes from dozens of top insurance companies, like Travelers, Nationwide, and Progressive, in seconds! They can even help cancel your old policy once you’ve made your pick. 
was wonderful! I used it for my auto and renters policies. I trusted it so much that I signed up my homeowners insurance under Jerry as well. All of the agents are amazingly nice and knowledgeable.” —Mary Y.


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