When can I remove private mortgage insurance from my loan?
To remove PMI that you pay on your mortgage loan, you must be up to date with your monthly payments. If you are, and if your mortgage closed on or after July 29, 1999, federal law generally provides two ways for you to remove PMI from your loan: canceling PMI or PMI termination.
Request PMI cancellation
The Homeowners Protection Act gives you the right to request that your lender cancel PMI when you have reached the date when the principal balance of your mortgage is scheduled to fall to 80 percent of the original value of your home. This date should have been given to you in writing on a PMI disclosure form when you received your mortgage. If you cannot find the disclosure form, contact your lender.
You can also make this request earlier if you have made additional payments to reduce the principal balance of your mortgage to 80% of the original value of your home.
There are other important criteria you must meet if you want to cancel PMI on your loan. Specifically:
- your request must be in writing;
- you must have a good payment history and be current on your payments;
- your lender may require you to certify that there are no junior liens (such as a second mortgage) on your home;
- your lender can also require you to provide evidence (for example, an appraisal) that the value of your property hasn’t declined below the value of the home when you first bought it. If the value of your home has decreased, you may not be able to cancel PMI.
If you meet these requirements your servicer generally must cancel your PMI when you request it.
Automatic PMI termination
Even if you don’t ask your lender to cancel PMI, your lender still must terminate PMI on the date when your principal balance is scheduled to reach 78% of the original value of your home. You also need to be current on your payments on the anticipated cancellation date. Otherwise, PMI will not be terminated until shortly after your payments are brought up to date.
It’s worth noting a termination request is different than a cancelation request. Your lender must terminate PMI even if the principal balance of your loan has not actually reached 78% of the original value of your home – for example, because the value of your home declined.
Final PMI termination
There is one other important requirement that some homeowners need to be aware of: your lender must terminate PMI if you reach the midpoint of your loan’s amortization schedule before the 78% date. The midpoint of your loan’s amortization schedule is halfway through the life of your loan. Most loans are 30-year loans, so the midpoint would occur after 15 years have passed.
Termination of PMI at the loan’s midpoint may occur before reaching 78% of the original value of your home for people who have a mortgage with an interest-only period, principal forbearance, or a balloon payment. Keep in mind that you must be current on your monthly payments for termination to occur.
If your loan is guaranteed by the Federal Housing Administration (FHA) or Department of Veterans Affairs (VA), these rules generally won’t apply. If you have questions about mortgage insurance on an FHA or VA loan, contact your servicer.
If you have lender-paid mortgage insurance, different rules apply.