Mortgage Tips

first-time buyers refinance market update

You May Be Paying for PMI You Don't Need. Here's How to Get Rid of It

Dale Corley · October 26, 2026 · 12 min read

Private mortgage insurance, or PMI, is the monthly charge nobody explains at closing, and last week the White House put it in the headlines. I cover what that news does and doesn’t mean near the end of this post. The rules that can cancel your PMI today are older, and I walk you through them first.

I’m a mortgage broker, so I shop loans across hundreds of lenders and you don’t have to. PMI is one of the questions I hear most from homeowners. This post starts with how to get rid of it, step by step, then covers what PMI is, why it exists, and the rules for each loan type.

Key takeaways

PMI is insurance on a conventional loan when you put down less than 20%. It protects your lender, not you.

You have two ways out. Pay your balance down to 80% of your home’s original value, or show your home has gained enough value (Fannie Mae loans). PMI also ends on its own at 78% of the original value.

Either way, you send your servicer (the company you send your payment to) a written request. The steps and two worked examples are right below.

FHA and USDA mortgage insurance often last 11 years or the whole loan, and VA loans have none.

The October 22 White House order is a pilot with no start date, and it covers only new loans. It changes nothing on your loan today.

On this page: How to get rid of PMI · What PMI is · Why it exists · Who benefits · Why it’s hard to cancel · FHA, USDA, VA · The White House order · Whiz Advice

How do you get rid of PMI, step by step?

Two things can get your PMI cancelled: your loan balance going down, or your home’s value going up. The first five steps are the same either way.

Gather three numbers. You need your home’s original value, your loan’s start date and your current balance. “Original value” is the lower of your purchase price or the appraised value, and your closing paperwork shows both. Your balance is on your latest mortgage statement.
Pick the test you can pass. Test A and Test B below show you how, with numbers.
Check that you qualify. Your servicer will look for four things. Your payments are current. You have no payment 30 or more days late in the past 12 months and none 60 or more days late in the past 24. You have no second loan or home equity line on the home, which the CFPB calls a junior lien. And your home hasn’t dropped below its original value.
Send a written request to your servicer. Its address is on your statement. Say you want your PMI cancelled, give your loan number and which test you’re using, and ask what proof of your home’s value it will accept and what that costs. Keep a copy.
Wait for the answer. A valuation is the servicer’s check of your home’s value. It can be an appraisal or a broker price opinion, which is a paid estimate from a local real estate agent. On Fannie Mae loans, the servicer must answer in writing within 30 days of getting the valuation. If it says yes, PMI comes off your payment and any unused premium comes back to you within 45 days. If it says no, the letter gives the reasons, and you can pay your balance down to the number you need or order your own valuation.

Test A: Has your balance paid down enough?

This test uses your home’s original value, not what it’s worth today. Here’s an example. It’s not a quote. You buy a home for $650,000, and the appraisal also comes in at $650,000. You put down 5% ($32,500) and borrow $617,500 on a 30-year fixed loan at 7%.

At 80% of the original value, $520,000, you can ask to cancel. Regular payments get you there after about 10 years and 10 months.
At 78%, $507,000, PMI should end on its own. That takes about 11 years and 10 months.
The latest it can last is the loan’s halfway point, which is year 15 on a 30-year loan, as long as you’re current.

To check, multiply your original value by 0.80 and compare it with the balance on your statement. If your balance is at or below that number, send your request. If your balance is below the 0.78 number and PMI is still on your bill, send the letter anyway, because it should have ended already. Extra payments get you there sooner.

For the dollars, I’ll assume PMI costs 0.60% of the loan a year, which is $308.75 a month. Your actual rate is on your Loan Estimate. Asking at 80% instead of waiting for 78% saves 12 months of PMI, which is $3,705.

Test B: Has your home gained value?

This test uses what your home is worth today. It exists because a rising home value shrinks the share of the home you owe even when your balance barely moves, and for many people that’s the faster way out. It’s Fannie Mae’s rule, and it requires a valuation.

Your loan is	Your balance must be	In the example, your home must be worth
2 to 5 years old	75% or less of today’s value	about $786,000 at year 4, which is 21% above the price
Over 5 years old	80% or less of today’s value	about $715,500 at year 6, which is 10% above the price

Here’s how I got those. At year 6 your balance is about $572,400, and $572,400 divided by 0.80 is $715,500. If your home reaches that value, you can ask to cancel at year 6 instead of waiting almost 12 years for it to end on its own. That’s 70 months of PMI you don’t pay, which is about $21,600, before the cost of the valuation.

To keep an eye on it, look up your home’s estimated value on a free site like Zillow once a year, and put a reminder on your calendar for your closing anniversary. If the estimate is close to the number you need, ask your servicer to order a valuation. Treat the free estimate as a screen only, because servicers won’t accept it as proof. Send me your numbers, and I’ll tell you which test you can pass and what to ask for.

Both tests apply to a one-unit home you live in and to a second home. Investment properties and 2 to 4 unit homes use tougher numbers, such as 70% on Fannie Mae loans. Fannie Mae and Freddie Mac back a large share of conventional loans, and the numbers above are Fannie Mae’s. Ask your servicer which company backs your loan and which rules apply.

What is PMI, and what does it stand for?

PMI stands for private mortgage insurance. A lender usually requires it on a conventional loan when your down payment is under 20% of the price, and you pay the premium. The CFPB says PMI covers the lender’s loss if you stop paying and does not protect you from foreclosure.

Most people pay a monthly premium that’s added to the mortgage payment. Some pay one premium at closing, and some pay a smaller amount upfront plus a smaller monthly amount. An upfront premium may not be refunded if you sell or refinance.

MI is short for mortgage insurance. It’s the general term, and PMI is the kind on conventional loans. Other loan types have their own versions.

Loan type	What it’s called	Monthly charge?
Conventional	PMI (private mortgage insurance)	Yes, when you put down less than 20%
FHA	MIP (mortgage insurance premium), plus a 1.75% upfront premium	Yes, an annual premium paid monthly
USDA	Guarantee fee at closing, plus an annual fee	Yes, the annual fee
VA	No monthly mortgage insurance, one-time funding fee	No

Why does PMI exist, and what does the 1998 law do for you?

Private mortgage insurance started in 1957, when a Milwaukee real estate attorney started the first company to insure home loans privately. That comes from the trade group for mortgage insurers, so keep in mind it has a point of view. Back then, lenders were wary of loans with less than 20% to 25% down unless the FHA insured them, and the FHA’s paperwork made that hard for many banks. Private insurance gave lenders another way to say yes to buyers with small down payments.

Getting it off your loan was the hard part. Before 1999, it depended on your lender, and cancellation policies varied widely. Congress fixed that with the Homeowners Protection Act, also called the PMI Cancellation Act, signed in 1998 and effective July 29, 1999. For loans closed on or after that date, it gives you three rights, and they’re the numbers in Test A:

PMI ends on its own when your balance is scheduled to reach 78% of the original value.
You can ask for it to end when your balance reaches 80%.
It must end after the loan’s halfway point, even if you haven’t reached 78%.

In every case you need to be current on your payments. The law also bars borrower-paid PMI from lasting for the life of the loan.

Who benefits from PMI, and who doesn’t?

The lender benefits most, because the insurance covers its loss. Buyers benefit too if they couldn’t or didn’t want to put 20% down. PMI lets you buy years sooner and use your savings for the move, repairs and a cushion.

You don’t benefit once the risk the insurance covers is gone. You’re still paying for protection that belongs to someone else, even after your home has gained value and you’ve paid down the loan. Here’s how I explain it to clients: PMI is a fee for getting in early. It’s worth paying when it gets you into a home you couldn’t buy otherwise. It’s not worth paying a day longer than you have to.

Why is PMI so hard to cancel?

Because the insurance belongs to your lender, and the investor behind your loan sets the rules your servicer follows. Three things make it harder in practice:

Before 78%, it’s on you to ask. Nothing cancels it for you until then.
Proof costs money. A valuation can come with a fee, and you may be the one paying it.
The tests are strict. One late payment or a home equity line can stop the request.

In my experience, most people never ask, because nobody told them they could.

What are the rules for FHA, USDA and VA loans?

They’re different, and they’re less flexible than conventional PMI. My pages on FHA loans and VA loans cover each program in more depth.

FHA loans. Under the schedule HUD put in place in March 2023, FHA charges an upfront premium of 1.75% of the loan plus an annual premium. On a 30-year loan with 10% or more down, the annual premium lasts 11 years. With less than 10% down, it lasts for the whole mortgage term. For example, a $400,000 home with 3.5% down has a base loan of $386,000. At the 0.55% annual rate that schedule lists for that case, the premium is about $2,123 in the first year, or $177 a month, for the life of the loan. HUD can change its schedule, so I check the current numbers on each file. The usual way out of lifetime FHA insurance is a refinance into a conventional loan once you have enough equity. I run that math both ways first, because a new loan means new closing costs and today’s rate.

USDA loans. USDA charges a guarantee fee at closing and an annual fee. The annual fee applies for the life of the loan. It doesn’t stop at 80%, and it changes only if you refinance into a different loan program.

VA loans. The VA says its loans don’t require monthly mortgage insurance. There’s a one-time funding fee instead, and veterans who receive VA disability compensation, and some others, are exempt from it.

What did the White House order do, and what doesn’t it do?

On October 22, 2026, the White House signed an order titled “Decreasing Housing Costs for the American People.” HousingWire reported that the signed version is narrower than the earlier draft, which would have covered existing loans. Here’s what the text says about mortgage insurance:

It’s a “may,” not a “must.” The director of the Federal Housing Finance Agency (FHFA) may direct Fannie Mae and Freddie Mac to create a pilot program.
It covers new loans only. The pilot applies to mortgages made after it’s set up.
It would use estimated value. The companies would use automated valuation models to estimate what your home is worth, and cancel mortgage insurance on their own when you meet the equity requirement.
Servicers would be told to speak up. Where the law and their systems allow, they’d notify you when cancellation may be available and cut unnecessary paperwork and appraisal costs.
It sets no deadline for the pilot and creates no enforceable rights. The order itself says so.

So what it doesn’t do is just as clear. It doesn’t change the PMI on any loan you have today. It doesn’t set a start date. It doesn’t give you any new right. It’s a headline, not a change to your loan, and I wouldn’t wait on it. My take is that I’m glad someone in Washington is finally asking why PMI is so hard to cancel. But a question isn’t a rule.

The part I find more interesting: title insurance

The order also goes after title insurance on refinances. A lender’s title policy is a one-time policy that protects the lender if someone challenges the ownership of your home or a lien turns up. On a refinance you usually buy a new one. In my experience, it can run from about $1,000 to $5,000, depending on the state and the loan size.

Today, Fannie Mae has a pilot that lets some lenders accept an automated title review in place of that policy on refinances where you owe less than 80% of your home’s value. FHFA once estimated that could save $500 to $1,500 per refinance, according to HousingWire. The order tells the FHFA director to consider expanding it nationwide, to refinances above 80%, with more approved providers. It also tells the director to consider dropping appraisal and paperwork requirements, and reducing some fees, on certain cash-out refinances that lower your monthly payment. Any savings would have to be passed on to you, and lenders would have to tell you about them.

Title insurers warn that skipping the policy removes protection against ownership and lien problems that can surface years later. That’s a real trade-off. It’s also still a pilot, so when you refinance, ask whether your lender offers it.

Whiz Advice

Don’t refinance just to drop PMI until we run the numbers. A refinance replaces your whole loan, and if your rate is well below today’s, you can lose more than the PMI saves. I compare the new payment and costs with what you’d keep paying.
Ask what the valuation costs before you request it. If you’re a few months from 80% on a paydown, a lump-sum extra payment can be cheaper than paying for a valuation.
Think twice before opening a home equity line. A second loan on the home can block your PMI request, so ask your servicer whether paying it off clears the way.
Buying with under 20% down? Ask me to price monthly PMI, upfront PMI and a mix. The best choice depends on how long you’ll keep the loan.

Why use a mortgage broker?

Let hundreds of lenders compete for your loan. You fill out one application.

Shopping for a mortgage on your own means applying again and again, sending the same documents over and over, and waiting on every quote. I do that part for you.

Here’s how it works:

Tell me your goals. I review them and structure your loan.

I shop it. I enter your scenario into my loan search system. It checks hundreds of lenders, including most of the big banks and big lenders, and sorts them by rate, APR (the yearly cost of the loan, including fees), monthly payment or total cost.

You get the best deal. If the lowest rate is your goal, I sort by rate, find the lender with the lowest rate at the moment you’re ready to lock, and lock it. Typically 350 or more lenders sit underneath with higher rates.

One application. One set of documents. Hundreds of lenders working for your business. I also make sure your application is accurate, so there are no surprises later.

Start your loan application here, and let me go to work! (opens in a new tab)

How do you get ready to get rid of PMI?

Here’s what you can do this week:

Write down your three numbers. Original value, loan start date and current balance, in a note you can find again.
Set a yearly reminder on your closing anniversary to check both tests.
Send me your numbers. My job is to help you find the loan program that fits you best and make sure the application is accurate.
Buying soon with under 20% down? Get pre-approved before you shop.

Pick your next step:

Ready to get pre-approved? Start your loan application (opens in a new tab). It’s the fastest way to find out what you can buy.
Have a one-of-a-kind situation? Book a 15-minute call (opens in a new tab) and we’ll talk it through.
Just have a question? Email me at [email protected] with your scenario, and I’ll write back.

I’m a mortgage broker with NEXA Lending, and I work with borrowers in all nine states where I’m licensed (CA, CO, TX, FL, GA, NC, SC, TN, VA). Programs, rates and approval depend on your full file. This is educational and not tax or legal advice.

Dale Corley | NMLS #1547543 | Licensed in CA, CO, TX, FL, GA, NC, SC, TN, VA | This is not a commitment to lend.