How Can I Avoid or Get Rid of PMI?

You can avoid private mortgage insurance (PMI) when you buy by putting at least 20% down on a conventional loan, using a VA loan, or splitting the financing into an 80% first mortgage and a second loan. If you already pay PMI, federal law lets you ask your servicer to cancel it once your balance reaches 80% of the home's original value, and it must end automatically at 78% if your payments are current. If Fannie Mae or Freddie Mac owns your loan, you can also ask to cancel based on a new appraisal, and refinancing can remove it once your home has gained value.

How do you avoid PMI when you buy?

PMI is insurance that protects the lender on a conventional loan when you put down less than 20%. You pay the premium. These are the main ways to get a loan without it:

Lenders measure the 80% against the lower of the purchase price or the appraised value. If a $400,000 home appraises at $390,000, a $320,000 loan is 82% of value and needs PMI unless you add $8,000 to the down payment.

FHA loans and USDA guaranteed loans charge their own mortgage insurance premiums or guarantee fees, so they do not avoid the cost (see the FHA section below).

VA loans

VA loans charge no monthly mortgage insurance and can offer no down payment if the sales price does not exceed the home's appraised value. VA instead charges a one-time funding fee on purchase loans: 2.15% of the loan with less than 5% down on first use (3.3% on later use), 1.5% with at least 5% down, and 1.25% with at least 10% down. You can pay it at closing or add it to the loan. Veterans who receive VA compensation for a service-connected disability, and a few other groups VA lists, pay no fee. See VA loan requirements for who qualifies.

Piggyback second mortgage

A piggyback loan is a home equity loan or line of credit that closes at the same time as your main mortgage. In an "80-10-10" on a $400,000 home, you borrow $320,000 on the first mortgage and $40,000 on the second, and put $40,000 down. Because the first mortgage is 80% of the home's value, it needs no PMI.

The CFPB lists the tradeoffs: the second loan usually has a higher, often adjustable, rate. Refinancing later is harder, because the second lender must agree unless the new loan pays it off. Compare the combined monthly cost of both loans with a single loan plus PMI before choosing. The CFPB also notes that piggyback loans are rare today, so few lenders may offer one.

Lender-paid mortgage insurance

With lender-paid mortgage insurance (LPMI), the lender pays for the policy and charges you a higher interest rate in exchange. Federal law requires the lender to tell you, no later than the date it commits to the loan, that LPMI cannot be canceled and ends only when you refinance, pay off, or otherwise end the loan. Ask the lender for both quotes and compare the extra interest over the years you expect to keep the loan with the PMI you would pay before it cancels.

When can you cancel PMI under federal law?

The Homeowners Protection Act covers borrower-paid PMI on a single-family home that is your principal residence, for loans that closed on or after July 29, 1999. It uses "original value," the lower of the purchase price or the appraised value at closing. It gives you three exits:

1. Request at 80%. You can ask your servicer in writing to cancel PMI when your balance reaches 80% of original value, either on the scheduled date or sooner through extra principal payments. You must be current, have a good payment history (no payment 30 or more days late in the past 12 months, and none 60 or more days late in the 12 months before that), and have no second mortgage or other junior lien. The servicer can also require proof, usually an appraisal, that the home's value has not fallen below the original value.
2. Automatic at 78%. The servicer must end PMI on the date your balance is scheduled to reach 78% of original value under the original payment schedule, if you are current. If you are behind, it ends once you catch up.
3. Midpoint. If PMI is still in place at the halfway point of the loan term (15 years on a 30-year loan), it ends the following month, if you are current.

Your PMI disclosure from closing lists your scheduled 80% date. If you later refinance, the original value becomes the appraisal used for the refinance.

Example: You buy a $400,000 home with 5% down and take a $380,000, 30-year loan at 7.00%. On the original schedule, the balance reaches $320,000 (80% of original value) in month 130, about 10 years and 10 months in, and $312,000 (78%) in month 142. Extra principal payments move up the request date but not the automatic date.

Can a new appraisal remove PMI sooner?

Yes, if Fannie Mae or Freddie Mac owns your loan and your home has gained value. Federal law measures only against original value, but Fannie Mae and Freddie Mac also let you cancel based on current value. Your loan-to-value ratio (LTV) is your balance divided by the home's value. Under Fannie Mae's Servicing Guide, for a one-unit home you live in or a second home, the LTV based on current value must be:

• 75% or less if the loan is 2 to 5 years old
• 80% or less if the loan is more than 5 years old If the value rose because of substantial improvements you made, such as a kitchen or bath remodel or added square footage, Fannie Mae can waive the 2-year minimum, and the LTV must be 80% or less. Routine repairs do not count.

For a 2- to 4-unit home you live in, or any investment property, the limit is 70% after 2 years. You must be current, with no payment 30 or more days late in the last 12 months and none 60 or more days late in the last 24 months. The servicer orders the valuation, which must include an interior and exterior inspection. If it denies the request, it must tell you why within 30 days after it receives your request or the valuation, whichever comes later.

In the example above, after 3 years the balance is about $367,600, so the home must be valued at about $490,100 or more to reach 75%. After 6 years the balance is about $352,200, so the home must be valued at about $440,300 or more to reach 80%.

Freddie Mac sets its own current-value rules in its Seller/Servicer Guide, so ask your servicer which owner's rules apply and what the valuation costs before you order one. Your servicer must tell you who owns your loan, and both Fannie Mae and Freddie Mac have online lookup tools. The down payment, credit, and income rules these companies set are covered in Fannie Mae and Freddie Mac loan requirements.

Does refinancing get rid of PMI?

It can. If a new conventional loan is 80% or less of the home's current appraised value, it needs no PMI. A refinance has closing costs, and if the new rate is higher than your current one, the extra interest can cost more than the PMI you drop. Freddie Mac's average 30-year fixed rate was 7.32% on October 22, 2026, so compare that with the rate on your current loan before you apply. For more on how a refinance changes PMI, see whether refinancing will lower your PMI.

How is FHA mortgage insurance different?

FHA's mortgage insurance premium (MIP) does not follow the PMI cancellation rules above. Under FHA's current premium schedule for loans longer than 15 years, the annual premium lasts:

• 11 years if your original LTV was 90% or less (at least 10% down)
• The life of the loan if your original LTV was above 90%

Paying down the balance or a rise in home value does not shorten either period. FHA loans that closed after 2000 with case numbers assigned before June 3, 2013 follow older rules, under which the premium can end once the balance reaches 78% of original value; ask your servicer if your loan is that old. To stop paying MIP sooner, you refinance into a conventional loan; at 80% LTV or less, the new loan needs no PMI. FHA also charges an upfront premium of 1.75% of the base loan amount at closing, on top of the annual premium.

For how each type of coverage works, see how mortgage insurance works. To estimate what you pay now, see how to calculate mortgage insurance.