Home / United States / PMI
HOMEOWNERS PROTECTION ACT
When PMI comes off a US mortgage.
The interesting date is not the day your spreadsheet says the balance is 80% of what you paid. It is the day the servicer is required to act, and those are not always the same day.
On a conventional loan, the Homeowners Protection Act gives two clocks. You can ask the servicer to cancel PMI on the date the principal balance is first scheduled to reach 80% of the original value, if you are current. The servicer must end PMI automatically when the balance is scheduled to reach 78% of the original value, again if you are current. FHA mortgage insurance is a different product and does not follow this script.
Why extra payments confuse the date
The statute’s automatic date is based on the original amortization schedule, not on extra principal you sent later. Paying extra can get the balance to 80% sooner, but you generally have to request cancellation and show the loan is current. A servicer can also ask for proof the value has not fallen. Our payoff calculator stops the PMI line when the modeled balance hits 80% of the price you typed. That is the economic point. It is not a letter from the servicer.
PMI in the calculator is an annual rate applied to the remaining balance. Many policies charge a rate on the original balance instead. If your declaration page says “original,” the dollar amount we show will drift from the bill even when the month we stop is about right.
The CFPB’s explainer is the right next read before you call the servicer. Do not send a cancellation letter based only on this site.
Questions
Does 20% down avoid PMI?
On a conventional loan, yes, that is the usual reason people put 20% down. FHA loans can still charge mortgage insurance with more than 20% down.
Is the 80% test on today’s appraisal?
The statutory request right uses original value. A new appraisal is a separate request some servicers allow, and they do not have to use it.
What to ask the servicer, in order
First, is the loan conventional or FHA? This page is the Homeowners Protection Act path, which is conventional PMI. FHA mortgage insurance does not follow the 80% and 78% clocks. Second, are you current? Cancellation rights assume the loan is current. Third, are you asking on the original schedule, or because extra payments got the balance to 80% of original value sooner? Extra payments generally need a written request. The automatic termination at 78% follows the original schedule, not the balance you created by paying ahead.
The payoff calculator stops its PMI line at 80% of the price you type. That date can be earlier than the servicer’s letter. Use the page to see the dollars. Use the servicer to change the bill.
80% of the original value is not 80% of today’s value
If you bought at $400,000, 80% of original value is a $320,000 balance. A later appraisal of $450,000 does not move the statutory figure to $360,000. Some servicers will consider a new appraisal if you ask. They do not have to. Extra payments that get the balance to $320,000 ahead of the original schedule are a reason to write and ask, not a reason the bill changes by itself the following month. Automatic termination waits for the date the original schedule would have hit 78%, which on that loan is a $312,000 balance, and only if you are current.