The Quick Read: A new appraisal can end borrower-paid PMI before the automatic date, but only if your servicer allows it and the numbers clear the test. Federal law ties automatic cancellation to your original value, so appreciation does not count unless you ask. You send a request, the servicer sets the valuation standard, and your payment history and liens get checked too.
Key Terms Defined
- Original value: the lesser of the purchase price or the appraised value when the loan was made.
- Current value: what a servicer-accepted appraisal or valuation says the home is worth now.
- LTV (loan-to-value): your current unpaid balance divided by the value being tested.
- Automatic termination: the point where the servicer must end PMI on a schedule tied to original value.
- Borrower-requested cancellation: your written request to end PMI before that automatic point.
- Seasoning: how long the loan has been in place, which sets the LTV you must show.
- Subordinate lien: a second loan or HELOC recorded behind your first mortgage.
How Does PMI Normally End?
PMI normally ends on a schedule, not on appreciation. Under the Homeowners Protection Act, you can ask the servicer to cancel when your balance is scheduled to reach 80% of original value, and the servicer must end it automatically at 78%. Both dates follow the amortization schedule.
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.
The federal consumer-finance regulator describes the 80% request right for single-family principal residences closed on or after July 29, 1999. The servicer must grant it if you ask in writing, are current, certify no junior liens, and can show value has not dropped below the original value. An appraisal is one way to show that. The federal consumer-finance regulator also notes that some servicers allow removal under their own standards. The new-appraisal route lives there.
Here is the catch most homeowners miss. Automatic termination ignores your home's growth. Fannie Mae's servicing guide ties it to the date the balance is first scheduled to reach 78% of original value, or the month after the loan's midpoint if that comes first. You must be current. Your home could be worth far more, and PMI still runs until then.
This is also worth knowing: PMI only exists above 80% LTV at origination. Across the wholesale conventional programs Lendmire places files with, borrowers reach it through 95% standard leverage, or 97% for a first-time buyer on a one-unit principal residence. Those borrowers carry PMI from day one, so a cancellation path matters. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Two Rule Sets, and Where the Appraisal Fits
The appraisal route is investor policy, not federal statute. That is why the first question is always who owns your loan.
The rules below apply to a one-unit principal residence.
| Situation | LTV needed on current value |
|---|---|
| Loan seasoned 2 to 5 years | 75% or less |
| Loan seasoned more than 5 years | 80% or less |
| Substantial improvements drove the gain | 80% or less, 2-year seasoning waived |
Rates are not quoted here.
Fannie Mae has its own current-value section in its guide. Its tiers are generally the same as those above for a one-unit home, but confirm the exact figures with your servicer, because they can differ by loan and by loan type. The stricter tier for multi-unit homes and rentals is lower still. That matters if the property is a second home or has a rental unit.
Are You Eligible? A Checklist
Run this before you pay for anything.
- Borrower-paid PMI. Lender-paid mortgage insurance is usually built into the loan terms, and you generally cannot cancel it on your own. Check your closing paperwork.
FHA mortgage insurance follows different rules and may involve a refinance.
- Seasoning. Two years minimum for the current-value route, unless improvements apply.
- Payment history. Fannie Mae's consumer site says you may need no payment 30 or more days late in the past year and none 60 or more days late in the past two.
- No subordinate liens. A HELOC or second mortgage can block the request.
- Value at or above original value. If the new valuation comes in below original value, Fannie Mae's guide says the request is denied, unless you pay the balance down to the test or verify value through its ordering procedure.
Skip the appraisal if any of these fail. A fee spent on a file that cannot qualify is a fee wasted.
A Worked Example Without Dollar Figures
Take a homeowner who bought a one-unit principal residence with 5% down. Four years in, the balance has dropped to about 90% of the original price. Home prices in the area have risen, and a valuation comes in at roughly 20% above the original price. Dividing the balance by that value gives an LTV near 75%. That clears the 80% bar for a loan seasoned past two years, and sits right at the 75% bar for the 2-to-5-year tier. This file looks workable, provided payments are clean and there is no second lien. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Now run a near miss. Same loan, but the valuation lands only 10% above original. The LTV comes out around 82%. That misses the bar. The fix is a principal paydown to reach the threshold. Fannie Mae's guide allows a paydown to meet the LTV test, so a small gap can often be closed that way. Another option is to wait, since the loan crosses from the 2-to-5-year tier into the 5-year-plus tier with its looser bar.
The break-even is simple. Compare the one-time appraisal fee against the monthly PMI you would stop paying. If PMI is a meaningful part of your payment, the fee typically pays back. Your own PMI line on the statement tells you the real number.
Step by Step: How the Request Works
1. Pull your numbers. Find the owner, PMI type, loan age, balance and original value. Compute LTV on a realistic current value.
2. Call the servicer first. Do not order an appraisal on your own. Servicers set the valuation standard, and many require their own order or approval. Ask what they accept and what it costs.
3. Send the request in writing. Fannie Mae permits written or verbal requests under Lender Letter LL-2018-03. The HPA criteria tie to a written request, so a letter is the safe path. Ask for an appraisal-based, current-value review.
4. The servicer orders or approves the valuation. Under Fannie Mae's guide the servicer checks its own valuation first. A broker price opinion or appraisal that comes in below original value ends the request.
5. The servicer reviews payment history and liens. Clean history and no second mortgage matter as much as the value.
6. Decision. Fannie Mae's guide says that when value meets the test, the servicer must terminate the MI and notify you; timing varies by file and servicer.
7. Confirm on the statement. Keep paying until the servicer confirms an effective date in writing, then check that the premium stops on the next statement.
What the Servicer May Accept
Servicers differ here, and this is where files stall. Some require a full appraisal from an approved appraiser. Others start with an automated valuation or a broker price opinion and only escalate if that falls short. Ask which one applies before you pay for any of them.
A practical note from the file side: if a servicer's own cheaper valuation comes in light, ask whether you can still submit a full appraisal. Fannie Mae's guide gives a borrower the option to verify value through the ordering procedure in that situation.
If the Appraisal Comes In Low or the Request Is Denied
A low value does not close the door permanently. Work through these in order.
- Check the comps. If the appraisal missed recent nearby sales or condition details, ask for a reconsideration of value with those sales documented.
- Pay down the gap. A principal curtailment can bring LTV under the bar.
- Wait for the next tier. Crossing five years of seasoning loosens the LTV requirement.
- Fix the blocker. A second lien or a recent late payment is not a valuation problem, and a better appraisal will not solve it.
- Consider a refinance. A new loan above 80% LTV generally needs mortgage insurance again, so a refinance only helps if the new appraisal puts you at or below 80%. The new appraisal becomes the new original value.
If you do go the refinance route, the standard rate-and-term lane on a one-unit principal residence goes to 95% LTV, with mortgage insurance above 80%. Run the break-even against closing costs and the new loan terms, not just the PMI savings. Lendmire's piece Refinance vs New Appraisal to Drop PMI on a Conventional Loan lays out that comparison. Exact terms depend on the lender's guidelines, property type, leverage, and a full review of the borrower's file.
Do Renovations Count?
They can, with documentation. Freddie defines substantial improvements as renovation that substantially extended the property's useful life, and its related section says the valuation must state the nature, extent and cost of the improvements and their effect on value. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
Fannie Mae's FAQ adds a reasonableness test. Improvement spending should be commensurate with the paydown you would otherwise need to hit the LTV. In practice, renovating just to drop PMI rarely pencils out. Painting and landscaping do not qualify. Keep receipts and contractor invoices if you did a real renovation, and ask the servicer what proof it wants.
Appraisal Route, Refinance, or Paydown?
| Route | Keeps your loan? | Closing costs? | Best when |
|---|---|---|---|
| New appraisal request | Yes | Appraisal fee only | Value is well above original and loan is seasoned |
| Refinance | No, new loan | Yes | You want new terms and LTV is 80% or less |
| Extra principal | Yes | None | You are a few points short of the bar |
An appraisal-based cancellation leaves your current terms alone. A refinance replaces them. That is a bigger decision than PMI alone.
What's Changed for Servicer Outreach
Fannie Mae's Lender Letter LL-2026-07 lets servicers solicit borrowers who may be eligible for MI termination on current value. Before that, borrowers had to know to ask.
Be careful with this. It is outreach, not automatic cancellation. Existing eligibility, payment-history and valuation rules still apply. Do not wait for a letter if you think you qualify.
After PMI Is Removed
Your monthly payment drops by the PMI amount. If your loan has an escrow account, the servicer adjusts it. Get the cancellation in writing, and watch the next one or two statements to confirm nothing is still being charged. Lower payments can also help your debt-to-income picture on a future loan, though that depends on the lender. Lendmire arranges conventional loan programs through wholesale lenders, where most files are reviewed through automated underwriting with a total debt-to-income ratio ceiling of 50%, subject to lender guidelines and full file review.
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.
Frequently Asked Questions
Does a higher appraisal guarantee PMI removal?
No. A value that clears the LTV test is only one condition. Payment history, subordinate liens, loan age and who owns the loan all still apply. A servicer can also decline a valuation it did not order or approve.
Can I drop PMI if I have a HELOC?
Usually not. Both investors look for subordinate liens, and a second lien can block a request. Ask the servicer whether closing or subordinating the HELOC changes the answer before you order anything.
Does this work on an FHA loan?
No. FHA mortgage insurance follows different rules and often requires a refinance to remove. This route applies to borrower-paid PMI on conventional loans.
What if my home is a duplex or a second home?
The bar is stricter. Occupancy also sets leverage at purchase, with second homes reaching 90% and investment property lower.
Who pays for the appraisal?
The borrower pays for it. Compare that one-time fee with the monthly PMI you would stop paying before you order.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire is a mortgage brokerage (NMLS# 2371349) licensed for consumer mortgage lending in 16 states, arranging FHA, VA, conventional and jumbo purchase and refinance loans through a wholesale lending network. Eligibility is determined by the lender on each file. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. CFPB – When can I remove PMI from my loan?
2. Fannie Mae Servicing Guide B-8.1-04, Termination of Conventional MI
3. Fannie Mae – What to Know About PMI
5. Fannie Mae Lender Letter LL-2026-07
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 Roll Closing Costs Into a New Construction Conventional Loan? · Does New Construction Need a Full Appraisal on a Conventional Loan? · Can You Get a Conventional Loan After a New Job or Graduation?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.