When Does PMI Go Away? PMI Cost Per Month and How to Remove It

PMI is the monthly penalty you pay for borrowing more than 80% of your home's value. The good news: it ends. The even better news: you can make it end faster. The detail most buyers miss is that the rules for when it ends are more specific than most online resources explain.

What PMI Costs Per Month

Private Mortgage Insurance is priced as an annual percentage of your loan amount, divided by 12. The rate depends on your credit score, LTV ratio, and loan type.

Typical annual PMI rates for conventional loans:

• 760+ credit score, 95% LTV: 0.5–0.7% annually
• 720–759 credit score, 95% LTV: 0.7–1.0% annually
• 680–719 credit score, 95% LTV: 1.0–1.3% annually
• Below 680 credit score: 1.3–1.5%+ annually

On a $300,000 loan (95% LTV, 760+ credit):

• 0.6% annual rate = $1,800/year = $150/month

On a $350,000 loan (90% LTV, 720 credit score):

• 0.8% annual rate = $2,800/year = $233/month

The most common range for a typical starter home is $100–$250/month. On a $380,000 loan with 5% down, expect $130–$200/month. It feels small relative to your mortgage payment, but over 5–7 years before you reach 80% LTV naturally, that's $7,800–$16,800 out of pocket.

How Much Is PMI on a Conventional Loan vs. FHA?

Conventional PMI (through Fannie Mae or Freddie Mac guidelines) and FHA mortgage insurance work differently:

Conventional PMI:

• Monthly premium only (no upfront fee for standard borrower-paid PMI)
• Rate depends on credit score and LTV — better credit = cheaper PMI
• Cancels automatically at 78% LTV based on original purchase price
• Can be requested at 80% LTV with good payment history

FHA Mortgage Insurance (MIP):

• 1.75% upfront MIP added to your loan balance at closing
• Annual MIP of 0.55% on 30-year loans with 3.5% down — that's approximately $152/month on a $330,000 loan
• If you put less than 10% down on an FHA loan originated after June 2013, MIP stays for the life of the loan — it does not go away

This is a critical distinction. Many buyers choose FHA for its lower credit score requirements, then assume PMI cancellation works the same way as conventional. It doesn't. FHA MIP on a sub-10% down payment loan is permanent unless you refinance into a conventional loan.

If your credit score qualifies for conventional, the PMI structure is almost always cheaper over time than FHA MIP — especially once you hit the cancellation threshold.

When Does PMI Go Away on a Conventional Loan?

The federal Homeowners Protection Act (HPA) of 1998 controls PMI cancellation on conventional residential mortgages. It establishes two removal paths:

Automatic termination: Your servicer is required to automatically cancel PMI on the date your loan balance is scheduled to reach 78% of the original purchase price (not current appraised value). This is based on the amortization schedule — the servicer cancels PMI on the date the schedule says you'll hit 78%, as long as you're current on payments.

Borrower-initiated cancellation: You can request PMI cancellation when your actual balance reaches 80% of the original purchase price. "Original" means what the home was worth when you bought it — the lower of purchase price or appraised value at origination. Requirements:

• Good payment history (no 30-day late payments in the past 12 months, no 60-day late in 24 months)
• Written request to your servicer
• Current on all payments as of the cancellation date

Cancellation based on new appraisal: If your home has appreciated significantly, you may be able to request cancellation earlier — based on current appraised value rather than original value. Requirements vary by lender, but typically:

• Loan must be at least 2 years old (24 months of payments)
• Based on current appraisal, LTV must be 75% or below (not 80%)
• For loans 5+ years old, LTV must be 80% or below based on current value
• Lender orders and controls the appraisal process

The 2-year and 75% rule for appreciation-based cancellation is often misunderstood. If your home has jumped 20% in value and you're 18 months into your loan, you likely can't use that appreciation to eliminate PMI yet.

How Long Until PMI Goes Away on Its Own?

This depends entirely on your starting LTV and interest rate. On a $300,000 loan at 7.0% with various down payments:

• 5% down (95% LTV): PMI cancels automatically at month 252 (year 21) — automatic termination at 78% of original value
• 10% down (90% LTV): Automatic termination around month 213 (year 17.75)
• 15% down (85% LTV): Automatic termination around month 173 (year 14.4)

These are long timelines. Most buyers want PMI gone much sooner.

The Fastest Ways to Remove PMI

1. Extra principal payments

Every extra dollar paid toward principal accelerates the moment you hit 80% LTV. On a $285,000 loan (5% down on $300,000), you need the balance to reach $240,000 (80% of $300,000) to request cancellation. That's $45,000 in principal reduction beyond the standard schedule.

An extra $300/month cuts the time to reach 80% LTV by roughly 4–5 years compared to standard amortization.

2. Appreciation + refinance

If your home has appreciated enough that your current LTV is below 80%, refinancing into a new conventional loan eliminates PMI entirely. The new loan is based on current appraised value, not original value.

Example: You bought at $300,000 with 5% down in 2022. The home is now worth $380,000. Your remaining balance is $275,000. LTV = $275,000 ÷ $380,000 = 72.4%. A new conventional loan has no PMI requirement.

The refinance only makes financial sense if the rate improvement and PMI elimination outweigh the closing costs. Run the break-even calculation.

3. Formal reappraisal request (2+ years in)

If you've been in the home at least 2 years and believe it has appreciated to push your LTV below 75% (on current value), request PMI cancellation through a formal appraisal. Your servicer orders it. If the appraised value supports 75% LTV or below, PMI cancels.

For Australian and New Zealand buyers: Lenders Mortgage Insurance (LMI) is structurally different — it's typically a one-time upfront premium capitalized into your loan, not a monthly charge. It doesn't "go away" from your monthly bill because it was already included in your loan balance at origination. However, once your LTV drops below 80% through appreciation and principal paydown, you can refinance with no new LMI on the new loan.

The PMI Elimination Math

To know exactly when your PMI ends, you need three numbers:

1. Your original purchase price (or appraised value if lower)
2. Your current loan balance
3. Your monthly payment schedule

The 80% target balance = Original value × 0.80

If your original purchase price was $320,000, the 80% target balance is $256,000. Pull your most recent mortgage statement, find your current balance, and calculate how many standard payments — plus any extra payments you're planning — get you to $256,000.

The Mortgage Math & Affordability Calculator Toolkit includes a PMI timeline worksheet that calculates your current trajectory to the 80% threshold, models the impact of extra payments on that date, and compares the total PMI cost saved by accelerating vs. waiting for the standard schedule.

The Bottom Line on PMI

PMI isn't a permanent tax on low down payments. It's a time-limited cost that ends once you've built enough equity — either through payments, appreciation, or both. The faster you understand the mechanics, the faster you can eliminate it.

For most buyers putting 5–10% down, the realistic path to PMI cancellation is 7–12 years on the standard schedule, or 3–6 years with a combination of moderate extra payments and typical market appreciation. It's worth tracking actively — servicers have no financial incentive to notify you proactively when you're approaching eligibility.