The Quick Read: PMI comes off in one of four ways. It ends on its own, you ask once the balance reaches 80% of the original value, you ask based on today’s value after the loan has aged, or you refinance. A move-up buyer has one extra wrinkle: the new home starts a fresh value and a fresh clock, so the plan has to begin at the purchase, not at the first PMI bill.
Key Takeaways
- PMI is the insurance that lets you buy with less than 20% down. It protects the lender, not you.
- You can ask to cancel at 80% of the original value. The servicer must end it automatically at 78%, if you are current.
- Appreciation and renovations only help on the current-value route, which has its own waiting period.
- Lender-paid mortgage insurance usually cannot be cancelled. Know which type you have before you plan anything.
- A second mortgage or HELOC can block a cancellation request until it is resolved.
- A more affordable fix is often at the purchase: size your down payment from sale proceeds with PMI in mind.
Why Move-Up Buyers Run Into PMI
PMI is not a penalty for being a bad borrower. It is the price of buying with a smaller down payment. Conventional loans do not require 20% down. Across the wholesale programs Lendmire places files with, a standard purchase on a principal residence reaches 95% loan-to-value (LTV, the loan as a percentage of the home’s value), and a first-time buyer program reaches 97%. Mortgage insurance applies once you pass 80% LTV. Every figure here is subject to lender guidelines and full file review.
Refinance savings and break-even estimate
The starting figures are an example value with a balance in proportion and a placeholder for costs. Replace them with yours, and enter the current rate from your statement.
Editable benchmark: 7.32% as of October 22, 2026 · Freddie Mac 30-year average via FRED®. A conventional market reference, not a refinance quote.
Illustrative starting assumptions: a $350,000 home value, a $245,000 current balance, a current rate you enter and a remaining term seeded at twenty-five years, closing costs seeded at $5,000 as an editable placeholder (not a fee quote) and rolled into the new loan, a thirty-year term at the current Freddie Mac benchmark, and property taxes and insurance estimated at typical national rates. Every field is editable.
Illustrative estimate only — not a Loan Estimate, approval, quote, or commitment to lend. The new rate field carries the weekly Freddie Mac thirty-year conventional benchmark, a market reference and not a refinance quote; a refinance is priced by the lender at lock, and the current rate, the remaining term and the closing costs are figures you enter. The current payment is estimated from the balance, the current rate and the remaining term; the break-even divides the closing costs by the monthly saving and ignores the interest effect of a longer term. On the VA IRRRL the funding fee is added to the loan unless the veteran is exempt. Taxes and insurance are editable estimates. Licensed in sixteen states for consumer mortgages; Lendmire is a broker, never the lender.
Move-up buyers feel this sharply. You sell one home, buy a bigger one, and the sale proceeds rarely cover 20% of the new price. Some sellers put every dollar down and still land at 85% or 90% LTV. Others keep cash back on purpose and accept PMI. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Both choices are fine. What matters is knowing how the insurance leaves. Lendmire arranges conventional loan programs through wholesale lenders, and the same exit rules apply no matter who starts the loan.
Step One: Find Out Which Kind of PMI You Have
Borrower-paid PMI is the common kind. It shows up as a monthly charge, or sometimes as a single upfront premium. You can cancel it once you meet the conditions below.
Lender-paid mortgage insurance works differently. The lender pays the premium and builds the cost into the loan terms. On the files Lendmire arranges, that structure stays for the life of the loan, and the borrower cannot cancel it. The usual exit is a refinance.
Check your closing paperwork. The mortgage insurance disclosure you signed at closing shows the type, and it should show the first date you can ask for cancellation. If it is unclear, ask your servicer. The servicer also knows whether Fannie Mae or Freddie Mac owns or guarantees your loan. The two sets of rules run broadly parallel, but the details differ.
The Four Ways PMI Comes Off
Each route has a different trigger. This table puts them side by side.
| Route | Trigger | Appraisal needed? | Best for |
|---|---|---|---|
| Automatic ending | 78% of original value, current on payments | No | Doing nothing |
| Request at 80% | 80% of original value, written request | Sometimes | Steady payers |
| Current-value request | 75% or 80% of today's value, after seasoning | Usually | Rising values, renovations |
| Refinance | New loan at or below 80% of a new appraisal | Yes | Lender-paid MI, big value gains |
Original Value vs. Current Value
This is the distinction most borrowers miss. It decides whether your home's appreciation helps you at all.
The original-value route. Federal law gives you a right to cancel on many mortgages. The CFPB explains that the right covers single-family principal residences, and that you can ask the servicer to cancel when the balance is scheduled to reach 80% of the home's original value. Extra payments can get you there sooner. For a purchase, original value is generally the lower of the sales price or the appraised value. A refinance resets it to the appraisal at that refinance.
The same federal rules require termination at 78% of original value if you are current, and at the midpoint of the loan term regardless. That midpoint is year 15 on a 30-year loan, according to a federal banking-agency help page. Home price growth does not move any of those dates.
The current-value route. This is investor policy, not a legal right. Under the Fannie Mae Servicing Guide, on a one-unit principal residence the loan must usually be seasoned (aged) at least two years, and your LTV on current value must be 75% or lower. After five years the line moves to 80%. If you made improvements that raised the value, such as a kitchen or bath renovation or added square footage, the two-year minimum can be waived, and the LTV must be 80% or lower. Routine maintenance does not count.
Freddie Mac has its own servicing guide with parallel rules. Have your servicer confirm which thresholds apply to your loan before you order anything.
The Eligibility Checklist
Servicers look at the same handful of items. Check them before you write a letter.
- Payment history. You must be current. Fannie Mae also looks back over 12 and 24 months. A useful rule of thumb from its consumer page: no payment more than 30 days late in the past year and none 60 days late in the past two.
- Liens. The request route requires that you certify no junior liens. A HELOC or a piggyback second mortgage on the new home can stop the request until it is paid off.
- Value. The servicer must confirm the value has not dropped below the original value. If it has, the request can be denied unless you pay the balance down enough or prove value through the servicer's prescribed process.
- Property and occupancy. One-unit principal residences get the friendliest tests. Two- to four-unit homes and investment properties face stricter LTV limits. If you keep your old home as a rental, expect tougher thresholds on that loan.
- Loan age. Loans under 24 months old are judged over their actual life, not a full 24 months.
How to Make the Request, Step by Step
1. Calculate your LTV. Divide your current balance by the original value for the 80% test. Divide by a current estimate for the current-value test.
2. Find your date. The scheduled 80% date should appear on your disclosure. If you prepay, your actual balance can reach 80% earlier.
3. Write the letter. Verbal requests can be accepted by some servicers, but writing creates a record. Include your loan number, the property address, a statement that you are current, and a statement that no junior liens exist.
4. Attach evidence. For a current-value request, add details of any improvements, such as receipts and a short description of the work.
5. Expect a valuation. The servicer's system may render a value first. If it shows a value at or above the original, the servicer ends the insurance and notifies you. If not, the servicer may order a broker price opinion or appraisal. Under Fannie Mae's guide, you pay for it, and the servicer orders it after receiving the fee.
6. Confirm in writing. Do not reduce your payment until the servicer confirms billing has stopped.
A modeled example, in percentages only. Say you bought at 95% LTV and nothing else changed. You pay as scheduled, and the servicer's own schedule says you reach 80% of the original value. You send the letter. Prices in your area have risen, but that does not matter, because you are on the original-value route. If prices did rise, a current-value request might get you out earlier, once the loan is two years old and the LTV is 75% or lower. Terms depend on the lender's guidelines, the property type, the leverage, and a full review of the credit profile.
If the Servicer Says No
A denial usually traces to one of four things: a late payment in the lookback window, a second lien, a value below the original, or a missing seasoning requirement. Ask the servicer to name the specific reason in writing.
Fix what you can. A lien can be paid off or subordinated. A low valuation can sometimes be challenged with a full appraisal, and Fannie Mae's servicer system allows an appeal of a completed valuation. If the denial seems wrong, send a written follow-up that cites the rule you meet. Keep copies of everything. Servicers can also make mistakes about whether your loan is lender-paid or borrower-paid, so confirm that first.
The Move-Up Buyer's Decision Path
The new loan starts a new original value and a new seasoning clock. That is the same reset that happens with a refinance. It is the part of the problem that is unique to your situation.
Here is how the common situations sort out.
| Your situation | Best move |
|---|---|
| Selling the old home, PMI still on it | Skip cancelling; payoff ends it |
| Buying first, sale pending | Plan down payment around expected proceeds |
| Keeping old home as a rental | Check occupancy rules; limits are stricter |
| New home just closed at 95% | Prepay or wait; track the 80% date |
| Lender-paid MI on the new loan | Plan on a refinance as the exit |
On the home you are selling. Cancelling PMI on a house about to be sold usually does not pay off. The payoff ends the loan and the insurance with it. Ask your servicer how any unearned premium is handled, particularly on a single upfront premium.
On your next qualification. Removing PMI lowers your housing payment, which can help your debt-to-income ratio on a later loan. In the wholesale conventional programs Lendmire places files with, most files are decided by an automated finding with a total ratio ceiling of 50%, and the minimum decision score starts at 620. A lower payment helps at the margin, but it is not a substitute for score and reserves.
Avoiding PMI on the Next Purchase
The cleanest way to remove PMI is to never start it. If your sale proceeds can cover 20% down on the new home, you sidestep the insurance entirely. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
If proceeds fall short, you are choosing among structures:
- A bigger down payment. No PMI at 20% or more, but it ties up cash you may need for moving costs and reserves.
- A smaller down payment with borrower-paid PMI. You keep cash, and you can cancel later.
- Lender-paid mortgage insurance. The monthly bill looks different, but you give up the right to cancel.
- A second lien. It can reduce the first mortgage to 80% LTV, but it blocks the cancellation request while it remains. Final terms depend on the lender's guidelines, the property type, and the borrower's complete credit picture.
None of these wins every time. The honest comparison is how long you expect to stay. Plan to be in the new home for many years, and borrower-paid PMI that you can cancel is usually more flexible. Plan to move again soon, and the insurance may never matter. PMI cost also varies by credit score, down payment and loan term, and Freddie Mac notes that PMI varies by borrower and is not the same as homeowners insurance. Ask your loan officer for the actual figure on your Loan Estimate.
Does a Refinance Make Sense?
Sometimes, but rarely for the reason people expect. A rate-and-term refinance on a one-unit principal residence can reach 95% LTV in the wholesale programs Lendmire works with. Mortgage insurance still applies above 80%. So a refinance only ends PMI if the new loan lands at or below 80% of a fresh appraisal. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
The math has real costs: closing costs, a new appraisal, and a new loan term. A refinance also resets your original value and your seasoning. If you are one year in and your value jumped, a current-value request after the two-year mark can be cheaper. Lendmire's piece PMI Appraisal vs Refinance for a Move-Up Buyer on a Conventional Loan covers that break-even logic in more detail.
A refinance does make sense in two cases. One is lender-paid mortgage insurance, where cancellation is not available. The other is a loan where the value gain is large and the current-value route is closed.
One note on government loans: FHA mortgage insurance is a different product with different rules, and it may require a refinance to remove. Nothing here applies to it.
What to Do Next
Start with three facts: your PMI type, your scheduled 80% date, and whether any second lien sits on the loan. Then decide which route fits your timeline. If you are weighing a refinance and want the break-even run on your own numbers, Lendmire can help you compare the programs on the same home.
Key Terms Defined
PMI (private mortgage insurance): Insurance on a conventional loan with less than 20% down. It protects the lender if you stop paying. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
LTV (loan-to-value): Your loan balance divided by the home's value, shown as a percentage.
Original value: For a purchase, generally the lower of the sales price or the appraised value at closing.
Seasoning: The age of the loan. Current-value cancellation requests need a minimum loan age.
Servicer: The company that collects your payments and handles cancellation requests. It may differ from the lender that made the loan.
Lender-paid mortgage insurance: Mortgage insurance the lender pays and builds into the loan. The borrower typically cannot cancel it.
Junior lien: A second loan against the home, such as a HELOC or piggyback mortgage.
Frequently Asked Questions
Does PMI go away on its own?
Yes, on borrower-paid PMI. The servicer must end it at 78% of the original value if you are current. It also ends at the midpoint of the loan term. You do not need to ask for that, but asking at 80% saves you the extra months.
Can I use my home's higher value to cancel PMI sooner?
Sometimes. Under Fannie Mae's rules, a one-unit principal residence needs an LTV of 75% or lower on current value after two years, or 80% or lower after five. Substantial improvements can waive the two-year minimum. Appreciation helps only on this route. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Do I pay for the appraisal?
Yes. The borrower pays for the broker price opinion or appraisal, and the servicer orders it after receiving payment. It may be worth asking whether the servicer's own system can render a value first.
Will a HELOC or second mortgage stop me from cancelling?
Yes, it can. The request route requires you to certify there are no junior liens. Paying off or resolving the second loan first removes that obstacle.
Is it worth cancelling PMI if I plan to sell soon?
Usually not. Selling pays off the loan, and the insurance ends with it. Ask your servicer how any unearned premium is handled, and put your effort into the next purchase instead.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage broker licensed for consumer lending in 16 states. Lendmire arranges FHA, VA, conventional and jumbo purchase and refinance loans through wholesale lenders; every file is underwritten by the lender under the applicable program guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. CFPB: When Can I Remove Private Mortgage Insurance PMI from My Loan
2. Banking-agency help page – PMI removal
3. Fannie Mae Servicing Guide B-8.1-04: Termination of Conventional Mortgage Insurance
4. Fannie Mae – What to know about PMI
5. Fannie Mae Servicing Guide F-1-02: Escrow, Taxes, Assessments, and Insurance
6. Freddie Mac MyHome – Breaking down PMI
This article is part of Lendmire’s conventional loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How to Remove PMI Early on a Conventional Loan With a New Appraisal · How Much a Piggyback Saves a First-Time Conventional Loan Buyer vs PMI · Refinance vs New Appraisal to Remove Conventional PMI for a Move-Up Buyer
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.