PMI Costs and Removal: The 80% and 78% Rules

Private mortgage insurance generally applies to conventional purchases with less than 20% down and protects the lender against default. Monthly premiums appear in the Projected Payments section of a Loan Estimate; other payment structures exist.

How is PMI calculated?

For a simple estimate on an original-loan annual premium, monthly PMI = original loan × annual PMI rate ÷ 12. In a hypothetical $300,000 purchase with $30,000 down, $270,000 × 0.006 ÷ 12 = $135 monthly, or $1,620 over 12 months if held constant. Actual premiums and renewal terms differ. CFPB premium disclosures.

Compare down-payment options and cash to close alongside the PMI estimate.

80% cancellation and 78% termination differ

For covered borrower-paid PMI on single-family principal residences, these are based on original value, generally the lower of purchase price or original appraisal; for a refinance, the refinance appraisal applies. On the $300,000 example, 80% and 78% are balances of $240,000 and $234,000. CFPB cancellation guidance.

Borrower-paid PMI cancellation and termination for covered homes
Route	Trigger	Additional conditions
Request cancellation	Scheduled balance reaches 80% of original value, or extra payments reach it sooner	Written request, good payment history, current payments, no junior liens, evidence value has not declined
Automatic termination	Scheduled balance reaches 78% of original value	Must be current; extra payment reaching 78% does not advance the scheduled date
Final termination	Month after amortization midpoint	Must be current, even if balance has not reached 78%

Coverage and exceptions matter. FHA, VA, multi-unit and investment properties, and lender-paid insurance may follow different rules.

Can appreciation remove PMI sooner?

Investor rules can allow cancellation using current value. For Fannie Mae one-unit principal residences or second homes, the usual current-value threshold is 75% LTV for loans aged two through five years and 80% after five years. Qualifying property improvements can waive the two-year seasoning rule at 80% LTV or less; routine maintenance and repairs do not qualify. Payment history and approved valuation rules still apply. Other investors and properties differ. Ask the servicer before paying for an appraisal. Fannie Mae B-8.1-04.

Use the PMI removal calculator for scheduled milestones, then confirm dates and the process with your servicer.

Who this may fit

Anyone considering a conventional loan with less than 20% down, or currently paying PMI and wondering how and when it may end.

Key decision factors

LTV at origination
PMI structure (borrower-paid, single-premium, lender-paid)
Credit profile and loan characteristics
Whether the loan reaches the cancellation threshold via amortization or a new appraisal

Illustrative example

Common mistakes

Assuming PMI ends automatically without checking the servicer's process
Ignoring PMI when comparing rates across down-payment options
Treating PMI cost as constant across borrowers — it varies

Questions to ask a licensed loan officer

Which PMI structure fits my situation?
What's the estimated cost of PMI over the time I expect to keep the loan?
What are the steps and criteria to request PMI removal later?

Common questions

When can I stop paying PMI?

For covered borrower-paid PMI on single-family principal residences, request cancellation at 80% of original value if conditions are met; automatic termination at scheduled 78% requires current payments. Other loan and insurance types differ.

Can a new appraisal help me remove PMI sooner?

Some investor rules allow current-value cancellation with seasoning, valuation and payment-history requirements. Ask your servicer for written criteria before buying an appraisal.

How much does PMI cost?

It varies by loan, credit, insurer and premium structure. The worked example uses invented inputs; your lender discloses the applicable premium on a Loan Estimate.

Is lender-paid PMI better?

With lender-paid mortgage insurance, you don't see a separate monthly PMI charge, but the cost is usually built into your rate, and it typically can't be cancelled like borrower-paid PMI. It can suit short holding periods. Compare both over the years you expect to keep the loan.

Can I avoid PMI with less than 20% down?

Options include lender-paid mortgage insurance or, in some cases, a second mortgage that covers part of the down payment. Each option has its own trade-offs, so compare total cost.

Choose your next step

Have a mortgage question?

Share a mortgage-planning request for review by Bolt Home Loans, or keep exploring your options here.

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Sources

Primary sources relied on for this page. Check scope varies by entry; a source check is not a licensed or human compliance review.

Freddie Mac Single-Family Seller/Servicer Guide
Freddie Mac · Status: Needs recheck · Published/effective: living document · Last checked: 2026-07-28
What was checked
General landing-page check only; not section-level validation. Specific chapters remain unverified.
CFPB — What Is Private Mortgage Insurance?
Consumer Financial Protection Bureau · Status: Verified (see check notes) · Published/effective: unverified · Last checked: 2026-09-25
What was checked
Checked PMI's purpose, general trigger with less than 20% down, available payment structures, and Loan Estimate disclosure. The 0.60% example premium is hypothetical, not a published rate. Editorial source check only; not a licensed human or compliance review.
CFPB — When Can I Remove PMI?
Consumer Financial Protection Bureau · Status: Verified (see check notes) · Published/effective: unverified · Last checked: 2026-09-25
What was checked
Checked borrower-requested cancellation at 80% of original value for covered borrower-paid PMI on single-family principal residences, scheduled 78% termination when current, midpoint termination, original-value definitions, and exceptions. Editorial source check only; not a licensed human or compliance review.
Fannie Mae Servicing Guide B-8.1-04 — Termination of Conventional Mortgage Insurance
Fannie Mae · Status: Verified (see check notes) · Published/effective: unverified · Last checked: 2026-09-25
What was checked
Checked current-value cancellation at 75% LTV after two to five years, and 80% after five years, for eligible one-unit primary or second homes; substantial improvements can waive the two-year seasoning at 80% LTV, but ordinary maintenance does not. Payment history and valuation conditions apply. Editorial source check only; not a licensed human or compliance review.

Conventional-loan PMI: calculation and removal