PMI exists to protect your lender, not you — and it doesn't disappear on its own unless you push
Private mortgage insurance (PMI) is a monthly premium charged on conventional home loans when the borrower puts down less than 20% of the purchase price. The logic from the lender's perspective is straightforward: the less equity you have in the home, the more risk the lender takes on if you default. PMI transfers that risk to a third-party insurer — at your expense. Depending on your loan size and credit profile, PMI typically costs between 0.5% and 1.5% of your original loan amount per year, which on a $350,000 mortgage means anywhere from $145 to $440 extra per month added to your payment.
The critical thing to understand is that PMI doesn't simply fall away the moment you've paid enough of your loan. Prior to 1999, lenders had no legal obligation to cancel it proactively — and some quietly collected PMI premiums well past the point where they were warranted. The Homeowners Protection Act (HPA) of 1998 changed that for loans originated after July 29, 1999, but it still places the burden partly on the borrower. You have to know the rules and, in many cases, take action yourself to trigger cancellation.
There's also an important distinction between PMI on a conventional loan and MIP — mortgage insurance premium — on an FHA loan. They look similar on your statement but operate under very different rules. FHA MIP is harder to remove and, for many borrowers who put down less than 10%, it now lasts for the life of the loan. If you have an FHA loan, your path to eliminating mortgage insurance is different from what's described here, and typically involves refinancing into a conventional loan once you have enough equity.
PMI removal isn't the same situation for every homeowner
Where you are in your loan — and what kind of loan you have — determines which path is available to you. Pick the situation that fits yours.
Every month you wait is money you won't get back
Unlike interest — which at least represents the cost of borrowing money — PMI buys you nothing. It doesn't build equity, it doesn't protect you if you lose your job, and it doesn't reduce your balance. If your lender files a claim after a default, the insurer pays your lender, not you. The sole beneficiary of PMI is the institution that made you the loan. Once your equity position justifies cancellation, continuing to pay PMI is a pure transfer of wealth from your household budget to a mortgage insurer's balance sheet.
The Consumer Financial Protection Bureau estimates that the average homeowner with PMI pays between $30 and $70 per month per $100,000 borrowed. On a typical $300,000 loan, that's $900 to $2,100 per year — and because PMI cancellation requires action from the borrower in many cases, the Urban Institute has found that many eligible homeowners continue paying it for 12 to 24 months longer than necessary simply because they didn't ask.
There is a trusted solution for this.
We've mapped out every legitimate path to PMI removal — by loan type, equity situation, and lender requirements — so you can act on the right one without guessing.
See the Trusted Solution →Free to read · Independently verified · Updated March 2026
What others have experienced
47 community experiences-
MR
I'd been paying PMI for six years and just assumed it would drop off automatically. Finally called my servicer and found out my balance had been below 80% LTV for almost 18 months. They removed it within 30 days of my written request — no appraisal needed because I was already past the original purchase-price threshold. Wish I'd called sooner. That's about $1,800 I didn't need to pay.
34 found this helpful -
TK
Our neighborhood appreciated a lot over the past few years so I asked our servicer about using a new appraisal. They said the loan had to be at least two years old (it was four, so fine) and that they'd order their own appraiser — I didn't get to choose. The appraisal came in high enough to show we were well under 80% LTV based on current value, and PMI was removed. Cost $500 for the appraisal but we were saving $190/month so it paid for itself in three months.
28 found this helpful -
JL
I have an FHA loan from 2018 with less than 10% down, so I'm stuck with MIP for the life of the loan under those rules. I looked into refinancing to a conventional mortgage since I now have well over 20% equity based on current value — the numbers actually work out to a lower payment even with a slightly higher rate, because I'd be dropping $230/month in MIP. It's not a quick fix but it's the right move in my situation. Just sharing because a lot of people don't realize FHA is different.
41 found this helpful
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