When Can You Remove PMI on a Conventional Loan?
Private mortgage insurance is easy to forget about once a monthly payment settles into a routine, but it doesn’t have to last for the life of a loan. Equity is what determines when it can come off.
The short answer
On a conventional loan, private mortgage insurance (PMI) generally falls away automatically once the loan balance reaches a set percentage of the home’s original value, and a borrower can typically request its removal even earlier once enough equity has built up. Federal rules set the general framework for both paths, though the specific thresholds and required steps can vary somewhat by loan servicer, so confirming the exact rules with the loan servicer is worth doing directly.
The two paths off PMI
There’s a meaningful difference between automatic termination and a borrower-requested removal. Automatic termination is required once the loan balance is scheduled to reach a set threshold of the home’s original value, based on the original amortization schedule, regardless of whether the borrower asks. Borrower-requested removal can happen earlier, once the actual loan balance — which may have dropped faster than scheduled because of extra payments — hits a slightly higher equity threshold, but only if the borrower submits a request and meets the servicer’s conditions.
- Automatic termination. Happens on schedule based on the original amortization timeline, no request needed.
- Borrower-requested removal. Can happen sooner if extra payments or rising home value built equity faster.
- Payment history requirement. Servicers typically require a clean recent payment record before approving early removal.
- New appraisal. Often required to confirm current value supports the equity claimed.
The role of a new appraisal
Because home values can rise or fall independently of the loan balance, a borrower requesting early removal based on increased property value, rather than simply paying down the loan, usually needs to fund a new appraisal to document that value. The lender or servicer typically has to agree the appraisal is acceptable, and some servicers set a minimum amount of time the loan must have been in place before they’ll consider a value-based request. Extra principal payments that shrink the loan balance faster than scheduled can also move up the timeline without necessarily requiring a new appraisal, since the balance itself is the metric being tracked.
What can complicate the timeline
A history of late payments in the recent months before a request can delay or block removal, even if the equity threshold has technically been met. Some loans also carry different PMI cancellation rules depending on whether the property is a primary residence, a second home, or an investment property, since those categories are underwritten differently. Reviewing the loan’s specific servicing terms, rather than assuming a single national rule applies uniformly, avoids surprises when the time comes to request removal.
What to weigh before requesting removal
A borrower approaching the equity threshold has to weigh the cost of an appraisal against the monthly savings from dropping PMI, along with how quickly that savings pays back the appraisal fee — a calculation similar in spirit to figuring out a refinance break-even point. It’s also worth checking the servicer’s specific requirements in writing, since rules and required documentation can change over time and differ between servicers.
The takeaway
PMI on a conventional loan isn’t permanent — it’s tied to a specific equity threshold that can be reached automatically over time or accelerated through extra payments or rising value. Knowing which path applies, and what documentation a servicer will require, makes it easier to stop paying for coverage once it’s no longer needed.