How to get rid of PMI: 6 ways to cancel mortgage insurance

You're making your mortgage payment every month, and somewhere in that total is a line item for private mortgage insurance (PMI) — money that protects your lender, not you. You want it gone. The good news: you have more options than you think, and some of them work much faster than waiting for your loan balance to grind down on its own.

Here's everything you need to know about removing PMI — including one strategy that most borrowers miss entirely.

How much does PMI cost?

Under the Homeowners Protection Act (HPA), your mortgage servicer is required to automatically cancel PMI when your loan balance reaches 78% of the original purchase price. You don't have to ask — it happens on its own based on your amortization schedule.

But here's the part most homebuyers don't know: you can request PMI removal at 80% LTV — a full 2% earlier than the automatic cancellation. That might not sound like much, but on a $350,000 home it means getting rid of PMI roughly 2 years sooner, saving $1,200+ in unnecessary PMI payments.

To request removal at 80%, you'll need to:

Your servicer may require a new appraisal at your expense to confirm the value. Which brings us to the most underused strategy for killing PMI early.

6 Ways to Get Rid of PMI Faster

1. Request a New Appraisal (The Strategy Most Borrowers Miss)

If your home has appreciated since you bought it, you may already have 80% LTV — you just haven't proven it yet. A qualified appraisal costs $400–$600, and if it shows your home's current value pushes your LTV to 80% or below, your servicer must cancel PMI.

This is especially powerful in markets with strong appreciation. If you bought a $350,000 home with 5% down two years ago and your home is now worth $385,000, your LTV has dropped from 95% to approximately 86% — and that's before accounting for your principal payments.

When to use this: If you've owned your home for 2+ years in a market with 3–5% annual appreciation, or if you've made significant improvements. The $500 appraisal cost pays for itself in 2–3 months of PMI savings.

2. Request Cancellation at 80% LTV

Don't wait for the automatic 78% threshold. As soon as you believe your loan balance has reached 80% of the original purchase price through regular payments, contact your servicer in writing and request cancellation.

The key word is original purchase price. For the 80% request path based solely on amortization, the HPA uses the original value, not current market value.

3. Make Extra Principal Payments

Every extra dollar you pay toward principal brings you closer to 80% LTV. On a $332,500 loan at 6.75%

• Normal payments only: reach 80% LTV in approximately year 9
• $200/month extra: reach 80% LTV in approximately year 5 — that's 4 years of PMI savings
• $500/month extra: reach 80% LTV in approximately year 3

At a PMI rate of $53–$80/month (for 740+ borrowers), removing PMI 4 years early saves $2,500–$3,800 in total PMI. And the extra principal payments build equity that benefits you regardless.

Our PrePay plan can provide a smart extra payment schedule that is highest upfront and decrease over time — maximizing the compounding effect. Borrowers using PrePay can build up to 2x more equity and hit the 80% LTV threshold significantly faster.

4. Refinance Into a New Loan at 80%+ Equity

If your home has appreciated substantially, refinancing lets you lock in a new loan where your LTV starts at 80% or below — meaning no PMI from day one. This is especially compelling when rates have also dropped since your original mortgage.

5. Refinance from FHA to Conventional (The FHA Escape Hatch)

FHA mortgage insurance (MIP) never goes away on loans with less than 10% down. The only way to stop paying FHA MIP is to refinance into a conventional loan

6. Improve Your Home to Increase Appraised Value

Strategic home improvements can push your appraised value up. Kitchen remodels, bathroom updates, ADU conversions, and curb appeal improvements all have strong appraisal impact. The highest-return improvements for appraisal purposes:

• Kitchen remodel: Average 60–80% cost recovery on appraisal
• Bathroom update: Strong appraisal impact, especially adding a half-bath
• ADU or garage conversion: Can significantly increase square footage and value in markets where ADUs are in demand
• Curb appeal: Landscaping, exterior paint, and entry improvements — low cost, meaningful appraisal impact

Combine with a new appraisal (strategy #1) for the biggest effect.

PMI vs. FHA MIP: Why It Matters for Removal

Conventional PMI automatically cancels at 78% LTV, can be removed by request at 80%, and varies by credit score. FHA MIP stays for the life of the loan if you put less than 10% down, is fixed at 0.55%, and the only exit is refinancing out entirely.

Should You Even Rush to Remove PMI?

With a 740+ credit score, PMI is approximately $80/month. Before rushing to eliminate it, consider whether that money could earn more invested elsewhere, whether you have a full emergency fund, and how long you plan to stay in the home.

PMI is temporary. It's also the cheapest ticket to homeownership.

The Bottom Line

PMI is removable — the question is how fast you want it gone. For most homeowners, the highest-impact move is requesting a new appraisal if your home has appreciated, followed by requesting cancellation at 80% LTV rather than waiting for the 78% auto-drop.

If you have an FHA loan, your MIP never goes away — refinancing into a conventional loan is the only exit.

Check your rate at Altgage to see where you stand.

Related Reading on Altgage

• How to Avoid PMI on Your Mortgage: 5 Strategies That Work
• Does Getting Preapproved Hurt Your Credit Score?
• What Is a Rapid Rescore?
• Can You Roll Closing Costs Into Your Mortgage?
• Get Your Rate

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