PMI Removal Calculator

PMI Removal Calculator

What Is PMI and When Does It Go Away?

Private mortgage insurance (PMI) is a monthly fee your lender charges when you buy a home with less than 20% down. It protects the lender — not you — against default losses. For a typical $350,000 loan with 5% down, PMI commonly runs $100–$200 per month.

PMI is not permanent. The Homeowners Protection Act (HPA) of 1998 gives you two removal paths:

• 80% LTV (borrower-requested): Once your loan balance drops to 80% of the original purchase price, you can submit a written request to your servicer. The lender may require an appraisal and a clean payment history (no 30-day lates in the past year, no 60-day lates in the past 2 years).
• 78% LTV (automatic termination): When the scheduled amortization reaches 78% of the original purchase price, the lender must cancel PMI automatically — no action needed from you. Your payments must be current.
• Loan midpoint: PMI must also be cancelled no later than the midpoint of your loan term, regardless of LTV, if payments are current.

How LTV Is Calculated

LTV (Loan-to-Value) is simply your loan balance divided by the home value, expressed as a percentage:

Example: You bought a home for $350,000 with 5% down ($17,500). Your starting loan was $332,500, giving an initial LTV of 95%. After 3 years of normal payments, your balance is ~$315,000 — LTV is now 90%. You need to reach $280,000 (80% of $350,000) before you can request PMI removal.

Purchase Price vs. Current Appraised Value

For standard HPA removal, the denominator is always the original purchase price — not the current market value. However, if your home has appreciated significantly, many servicers will accept a new appraisal and calculate LTV against the higher current value. This path is explained below.

Using Home Appreciation to Remove PMI Early

If home values in your area have risen since you bought, your current LTV may already be below 80% even though your loan balance hasn't paid down that far. Most lenders will allow an early PMI removal request based on a new appraisal under these conditions:

• You have made at least 2 years of on-time payments (some lenders require 5 years if LTV hasn't dropped below 75% based on the original schedule)
• You order a lender-approved appraisal at your expense (typically $400–$700)
• The appraisal confirms the current LTV is at or below 80%
• Your payment history is clean (no recent lates)

If your current appraised value is significantly higher than your purchase price, enter it in the optional field above — the calculator will show your LTV based on the appreciated value and flag if PMI removal may be available now.

Refinancing as an Alternative

If your home has appreciated, refinancing into a new loan sized at 80% or less of the current value eliminates PMI entirely on the new loan — no HPA process required. Use the Break-Even Calculator to check if the closing costs make sense before pursuing this route.

5 Things That Affect When PMI Goes Away

1. Down payment size: A 10% down payment starts at 90% LTV — PMI removal comes faster than a 5% down loan at 95% LTV.
2. Interest rate: A lower rate means more of each payment goes to principal, which accelerates LTV reduction.
3. Extra principal payments: Any extra payments made directly to principal lower your balance faster and move the 80% LTV date forward.
4. Home appreciation: Even without extra payments, rising home values can drop your LTV below 80% on the current-value basis, enabling an appraisal-based early removal request.
5. Loan term: A 15-year loan pays down principal twice as fast as a 30-year, so PMI removal typically arrives years earlier on a shorter term.

Frequently Asked Questions

When can I request PMI removal?

Once your loan balance reaches 80% of the original purchase price. Submit a written request to your servicer. They may require a current appraisal, no recent late payments, and confirmation that there are no subordinate liens on the property.

When is PMI automatically cancelled?

At 78% LTV based on the original amortization schedule — even if you've made extra payments. The lender must cancel PMI automatically without any action from you, provided payments are current at that time.

Can home appreciation help me remove PMI early?

Yes. If your home has appreciated and your LTV based on the new appraised value is 80% or below, most servicers will accept a new appraisal for early PMI removal. You generally need at least 2 years of payment history. The appraisal cost (typically $400–$700) usually pays for itself within a few months of PMI savings.

Is refinancing a way to remove PMI?

Yes. If you refinance when your LTV is at or below 80% of the current appraised value, the new loan will not require PMI. This is most effective when your home has appreciated significantly. Use the Break-Even Calculator to see if refinancing closing costs are worth the PMI savings.

Related Guides

• Refinance Break-Even Calculator — Is a Refi Worth the Closing Costs?
• Mortgage Savings Calculator — Monthly, 5-Year, and Lifetime Savings
• Mortgage Refinance Closing Costs: Every Fee Explained
• How Much Can You Save by Refinancing?
• Cash-Out Refinance Calculator Guide
• Refinance Situations: When It Makes Sense
• The 1% Refinance Rule of Thumb
• Full Refinance Calculator — Compare Multiple Lenders