The basics
Private Mortgage Insurance (PMI) is required on most conventional loans with less than 20% down. Under the federal Homeowners Protection Act, PMI must be automatically canceled when your loan balance reaches 78% of the original purchase price (provided you are current on payments).
Why it matters in 2026
You can REQUEST cancellation earlier — at 80% loan-to-value (LTV) — by writing to your servicer. To approve, the servicer requires (1) loan in good standing, (2) no second mortgages, and (3) a current property value supporting the 80% LTV claim.
How it actually works
If your home has appreciated since purchase, you can hit 80% LTV through appreciation alone — without paying down principal. Order a Broker Price Opinion (BPO) or full appraisal ($300-$600), submit the value with your cancellation request, and the servicer must consider it.
Common pitfalls
FHA loans use MIP (Mortgage Insurance Premium) with different rules. MIP on loans originated after June 2013 with less than 10% down lasts for the life of the loan — you can't cancel it. The only way out is refinancing to a conventional loan once you have 20% equity.
Practical recommendations
In 2026, with average rates near 6-7%, refinancing FHA to conventional to drop MIP only makes sense if you can do so without raising your rate much. Run the breakeven math: monthly MIP savings vs higher rate + closing costs. For many borrowers, lender-paid MI conventional loans are now competitive with FHA at low down payments.
Key takeaways
- Understand the structure before you shop.
- Compare quotes from at least three carriers.
- Document everything and revisit coverage annually.
- Pair with related coverage for full protection.
Related reading on InsureLab
Sources & further reading
Frequently asked questions
When does PMI automatically cancel?+
Under federal law, conventional loan PMI must auto-cancel when the loan balance reaches 78% of original purchase price, provided you're current on payments.
Can I cancel PMI before 78%?+
Yes — request cancellation at 80% LTV by writing to your servicer, supported by current property value (BPO or appraisal). Loan must be in good standing with no second mortgages.
Why can't I cancel FHA MIP?+
FHA MIP on loans originated after June 2013 with less than 10% down lasts the life of the loan. Refinancing to a conventional loan is the only way out.
Does appreciation help cancel PMI?+
Yes — if your home has appreciated, you can hit 80% LTV through appreciation alone. Order an appraisal and submit it to the servicer with your cancellation request.
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