Private Mortgage Insurance (PMI) is something many homeowners are familiar with—especially if you bought your home with less than 20% down. While PMI can help buyers qualify for a loan with a smaller down payment, it can also add a significant monthly cost to your mortgage. The good news? In some cases, PMI can be removed earlier than you might expect—and sometimes, without putting any additional money down.
Let’s dive into how that works.
What Is PMI?
Private Mortgage Insurance (PMI) is a type of insurance lenders require when you purchase a home with less than 20% down. It protects the lender—not the borrower—in case of default. PMI is typically added to your monthly mortgage payment.
When Can PMI Be Removed?
There are a few ways PMI can be removed:
- Automatic Termination – By law, lenders must automatically cancel PMI when your loan balance reaches 78% of the original purchase price.
- Borrower-Initiated Removal – You can request PMI removal once your loan-to-value (LTV) ratio hits 80%—meaning you’ve built up 20% equity.
- Refinancing – If your home has appreciated in value, refinancing your loan might eliminate the need for PMI.
- New Appraisal Without Refinance – In some cases, lenders allow you to order a new appraisal to prove you’ve reached 20% equity due to market appreciation.
Real Example: No Extra Cash Needed
Recently, we spoke with a homeowner who was still paying PMI years after purchasing their home. After reviewing their mortgage details, we discovered that their home had significantly appreciated in value. By ordering a new appraisal, we were able to confirm they had over 20% equity—qualifying them for PMI removal.
The best part?
They didn’t need to refinance or put any extra cash down.
How to Find Out If You Qualify
Not sure if you qualify to remove PMI? Here’s what to do:
- Review your current loan balance and the original purchase price.
- Estimate your home’s current value using online tools—or better yet, get a professional appraisal.
- Contact your lender to learn their specific requirements for PMI removal.
- Talk to a mortgage or real estate professional to help guide you through the process.
Why It Matters
Removing PMI can save you hundreds—even thousands—of dollars each year. And in many cases, it’s just a matter of timing and paperwork. If your home has gone up in value, you might already qualify.
Let’s Take a Look at Your Options
Every mortgage is different, but many homeowners don’t realize how close they are to ditching PMI. If you think this might apply to you—or you just want to explore your options—we’d love to help.