The Quick Read: No, usually not. On most conventional loans with borrower-paid PMI (private mortgage insurance, the monthly charge for putting down less than 20%), the insurance can come off without a new loan. It ends automatically at 78% of the original value, or you can ask your servicer to cancel it at 80%. A refinance is one tool, and it only wins in specific situations covered below.
Which Kind of Mortgage Insurance Do You Have?
Start here, because the answer to “do I have to refinance?” depends on the kind of insurance on your loan.
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.
| Type | Refinance required? | The catch |
|---|---|---|
| Borrower-paid PMI | Usually no | Needs a request or an automatic trigger |
| Lender-paid MI | Often yes | The cost is built into the loan terms |
| FHA mortgage insurance | Often yes | Different rules, not PMI |
Borrower-paid PMI is the common kind on a conventional loan. It shows up as its own line in your monthly payment. Lender-paid mortgage insurance works differently. The lender covers the premium and builds the cost into the loan terms, so there is no separate line to cancel. Getting rid of it usually means a new loan.
FHA insurance belongs to a different program. Fannie Mae's consumer PMI page says FHA mortgage insurance is more complicated and may involve refinancing. This article covers the conventional side.
The Four Ways PMI Ends
Four paths exist. Three of them skip the new loan.
| Path | Value used | You must act? | New loan? |
|---|---|---|---|
| Automatic termination | Original value | No | No |
| Request at 80% | Original value | Yes | No |
| Current-value request | Today's value | Yes | No |
| Refinance | New appraisal | Yes | Yes |
Original value means the lesser of your purchase price or the appraised value when you bought. Current value is what the home is worth today. That difference matters, as you'll see.
Automatic Termination: What Happens If You Do Nothing
If you stay current on payments, PMI ends on its own. Per Fannie Mae's Servicing Guide, the termination date is when your scheduled balance first reaches 78% of the original value. If it never gets there, termination comes the first day of the month after the midpoint of the loan's amortization period.
Two details trip people up. The 78% date follows the original payment schedule, not your actual balance. And if you are behind on payments, the servicer cannot terminate, even when every other test is met.
Doing nothing works. It just may cost you months of premiums you didn't need to pay.
Asking Early: The 80% Request
Automatic termination is the backstop. You can usually go sooner. Under federal law, you can ask your servicer to cancel PMI once your balance is scheduled to reach 80% of the original value. Extra principal payments can get you there sooner. The Consumer Financial Protection Bureau says the servicer must grant the request if:
- The request is in writing.
- You have a good payment history and are current.
- You certify there are no junior liens, such as a second mortgage.
- You can show the home's value hasn't fallen below its original value, often with an appraisal.
That federal right applies to single-family principal residences closed on or after July 29, 1999. A common myth says PMI drops automatically at 80%. It doesn't. The 80% point needs a request. Automatic termination waits until 78%.
Using Today's Value
Say your home has gained value. Original-value rules won't reflect that, but Fannie Mae and Freddie Mac policy can. This is investor policy, not federal law, and it applies to loans those two own or guarantee.
On a one-unit principal residence, Fannie Mae's current-value rule works like this:
- Loan seasoned between two and five years: the LTV must be 75% or less.
- Loan seasoned more than five years: the LTV must be 80% or less.
LTV, or loan-to-value, is your loan balance divided by the home's value. Freddie Mac uses the same thresholds.
Substantial improvements can change the math. Fannie Mae waives the two-year seasoning wait if improvements raised the value, and the LTV must be 80% or less. Think kitchen and bathroom renovations or added square footage. Maintenance repairs don't count, and you must give the servicer details of the work.
You pay for the valuation. Freddie Mac's servicing guide says the servicer verifies current value through a broker price opinion or a new appraisal, at the borrower's expense. That cost is modest next to a refinance, which carries its own appraisal plus closing costs.
On Fannie Mae loans, the guide says the servicer must not solicit you on a current-value request and may only act on yours. Don't wait for the phone to ring. Call your servicer.
How to Request Cancellation
Here is the sequence I'd follow.
1. Confirm who owns your loan and what kind of insurance it has. Your servicer can tell you. Agency rules apply to Fannie Mae and Freddie Mac loans. Portfolio, jumbo and other non-agency loans follow the investor's own rules.
2. Find your date. Your PMI disclosure form should show the first date you can request cancellation.
3. Check payment history. Fannie Mae's consumer guidance says you may need no payment 30 days or more late in the last year and none 60 days or more late in the last two.
4. Check for a second mortgage or HELOC. A junior lien blocks the standard request path.
5. Do the LTV math. Divide your balance by the original value, or by today's value if you're using the current-value route.
6. Send the request in writing. Ask what valuation they will accept and who orders it.
7. Confirm the cancellation. Don't stop paying PMI until the servicer confirms it is gone.
Fannie Mae and Freddie Mac also accept verbal requests, but a written one leaves a paper trail.
What If the Servicer Says No?
Denials happen. A value that came in low, a second lien, or a late payment can sink a request. Work the ladder:
- Ask for the reason in writing. You're entitled to know why.
- Check the valuation. On Fannie Mae loans, an appeal of a completed valuation is a supported action. Ask the servicer.
- Fix what's fixable. Pay down the balance, clear the late-payment window, or subordinate a second lien.
- Try again later. A denial today doesn't block a request at the next threshold.
- Weigh a refinance. If the home has appreciated well past the original value, a refinance with a fresh appraisal may succeed where cancellation failed.
When a Refinance Is the Right Move
A refinance sets a new original value through a new appraisal. If the new loan comes in at 80% LTV or below, it carries no mortgage insurance. That makes a refinance sensible in these situations. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
| Situation | Why refinancing fits |
|---|---|
| Big appreciation, loan under 2 years old | Skips the seasoning wait |
| Lender-paid MI | No separate premium to cancel |
| Second lien in the way | A new first mortgage can pay it off |
| You want a different term anyway | PMI removal is a bonus |
| Value fell below original | Fresh appraisal resets the base |
| FHA loan | Conventional refinance can end FHA insurance |
On that last row, across the wholesale programs I place files with, a rate-and-term refinance on a one-unit principal residence reaches 95% LTV, and mortgage insurance applies above 80%. Cash-out is capped lower, at 80% LTV on a one-unit principal residence. Those are program caps, subject to lender guidelines and full file review.
The Costs of Each Path
Cancellation costs a valuation fee and some paperwork. A refinance costs closing costs, a new appraisal, and re-qualification. It also resets your amortization clock, which means starting the loan's payoff schedule over. The new loan also resets the original value for any future cancellation.
Here's the break-even logic, with no dollar figures needed. Take your total refinance closing costs and divide by the monthly PMI you'd stop paying. The result is the number of months before the refinance pays for itself. If you plan to move before then, skip the refinance.
That math ignores the other side of the trade. A new loan has its own terms, and those may be better or worse than your current ones. Compare the full terms on the Loan Estimate, not just the PMI line.
Recasting is another alternative. A recast means paying a lump sum and having the lender re-amortize the same loan. It lowers the payment but doesn't directly cancel PMI. Extra principal payments, meanwhile, simply get you to the 80% request point sooner.
Edge Cases That Change the Answer
- Two- to four-unit principal residences and investment properties. Fannie Mae's automatic rules differ here: termination comes at the amortization midpoint. Current-value requests need a 70% or lower LTV and more than two years of seasoning. The same rules cover a second home, though its leverage caps differ at purchase.
- Freddie Mac "non-HPA" loans. Freddie Mac's guide sets stricter tests for loans outside the federal law, including a 65% LTV. Ask your servicer whether your loan falls in that group.
- Value declines. If your value fell below the original, cancellation on schedule may fail.
- Delinquency. Late payments pause everything.
- Non-agency loans. Some lenders and servicers allow removal under their own standards, so ask yours. Final terms depend on the lender's guidelines, the property type, and the borrower's complete credit picture.
One pending change deserves watching. Fannie Mae may soon let servicers reach out to borrowers near current-value thresholds. Check Fannie Mae's site before assuming your servicer is allowed to call.
Key Terms Defined
PMI (private mortgage insurance): A monthly charge that protects the lender when you put down less than 20% on a conventional loan.
LTV (loan-to-value): Your loan balance divided by the home's value, shown as a percentage.
Original value: The lesser of the purchase price or the appraised value when you took the loan.
Seasoning: How long you've held the loan, which decides which current-value test applies.
Amortization: The schedule by which each payment pays down your balance over the loan term.
Junior lien: A second mortgage or HELOC that sits behind your first mortgage.
Frequently Asked Questions
Can I stop paying PMI just because my home value went up?
Not on your own. Rising value helps only if you ask your servicer to cancel under the current-value route, and the home must meet the seasoning and LTV tests. Expect a valuation at your expense. The servicer decides whether to accept it.
Does PMI drop off automatically at 80% equity?
No. Automatic termination comes at 78% of the original value on the scheduled payment schedule, if you're current. At 80% you must ask. Contact your servicer when you reach that mark.
Is lender-paid mortgage insurance removable like PMI?
Usually not. Lender-paid coverage is built into the loan terms, so there's no line to cancel. Getting out of it typically means refinancing, and the new loan generally needs 80% LTV or lower to avoid mortgage insurance.
Will a refinance get rid of PMI for sure?
Not for sure. A refinance carries no mortgage insurance at 80% LTV or below on the new appraisal. Above 80%, PMI applies again, and the new loan resets the original value. Program terms are subject to lender guidelines and full file review.
What if I have a second mortgage or HELOC?
It blocks the standard cancellation request, since you must certify there are no junior liens. Paying off or subordinating the second lien may reopen the path. Otherwise a refinance that rolls it into a new first mortgage is the fallback.
Your Decision in One Line
Check cancellation first, then run the numbers on a refinance. 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. Reach the team at 828-256-2183 or through the conventional loan programs page. Nothing here is a commitment to lend.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage serving homeowners and home buyers in 16 states. FHA, VA, conventional and jumbo purchase and refinance loans are arranged through wholesale lending channels; Lendmire brokers the financing and the lender underwrites each application. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Fannie Mae – What to Know About PMI
2. Fannie Mae Servicing Guide B-8.1-04 (automatic termination)
3. CFPB – When can I remove PMI from my loan?
4. Fannie Mae Servicing Guide B-8.1-04 (current-value section)
5. Freddie Mac Guide Section 8203.2
This article is part of Lendmire’s conventional loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can You Get Cash Out on a Refinance With a Conventional Loan? · Does a Conventional Loan Let You Take Cash Out When You Refinance? · Can You Cash-Out Refinance a Freddie Mac Loan That Has PMI?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.