PMI on Conventional Loans: Cancellation, Refunds, and Complaints

To cancel PMI on a conventional loan, wait until your mortgage balance drops to 80% of the home’s original value, then send your servicer a written cancellation request. Federal law, specifically the Homeowners Protection Act of 1998, gives you that right as long as you are current on payments and meet a handful of other conditions. If you never request it, the servicer must terminate PMI automatically once the balance reaches 78% of original value, or at the midpoint of your loan term, whichever comes first.¹

Everything below assumes you have borrower-paid PMI, the standard monthly or split-premium type. If your loan carries lender-paid PMI, the cost is built into your interest rate and cannot be canceled; refinancing is the only way out. FHA loans have their own mortgage insurance premium with different rules that generally cannot be canceled through equity growth alone.

Requesting Cancellation at 80% LTV

The 80% threshold is the earliest point at which you can force the issue. Once your principal balance falls to 80% of the home’s original value, submit a written request to your servicer.¹ Your servicer must grant the request when you meet the eligibility conditions.

You need to be current on payments and show what the statute calls a “good payment history.” Fannie Mae defines that as no payments 30 or more days late in the past 12 months and no payments 60 or more days late in the past 24 months.² You also have to certify that no second mortgage, home equity line of credit, or other junior lien sits against the property.¹ Depending on the loan and the servicer, you may also be asked to demonstrate that the property’s value has not fallen below its original value, sometimes through an appraisal or broker price opinion.

Watch the word “original.” The statute defines original value as the lesser of the purchase price or the appraised value at the time you closed.³ It is not what the home is worth today. If you paid $400,000 and the closing appraisal came in at $395,000, the original value is $395,000, so 80% is $316,000. Under this route, you get to 80% by paying the balance down, not by watching prices rise. The PMI disclosure form you received at closing shows the month your scheduled balance is projected to hit that mark.

Extra principal payments accelerate that date. Sending an additional amount each month, applying a tax refund to principal, or making a lump-sum payment all shrink the balance faster than the amortization schedule contemplates, which brings your request date forward.

Cancelling Earlier Based on Home Value Growth

If your home has appreciated, you can potentially cancel before your scheduled 80% date, but the equity bar is higher and you have to pay for an appraisal. On Fannie Mae-backed loans, the rules turn on how long you have had the mortgage.²

Loans two to five years old: current LTV of 75% or less, meaning at least 25% equity based on the current appraised value.
Loans older than five years: current LTV of 80% or less, meaning at least 20% equity based on the current appraised value.
Loans less than two years old: appreciation-based cancellation is generally unavailable unless you made substantial property improvements, such as a kitchen renovation or an addition, in which case the current LTV must be 80% or less.

The appraisal has to come from the servicer’s approved network. An independent appraisal you commissioned on your own will not count. Plan on roughly $300 to $600 for a standard single-family appraisal, and you pay that cost whether the number comes back high enough or not.

The same payment history rules apply on this path: current on your loan, no 30-day late in the past year, no 60-day late in the past two years. Once the appraisal confirms your equity clears the applicable threshold and the servicer verifies the file, cancellation goes through.

Automatic Termination if You Do Nothing

You don’t actually have to lift a finger to eventually be rid of PMI. The Homeowners Protection Act builds in two automatic exits.

The first is the termination date, defined as the day your balance is scheduled to reach 78% of the home’s original value under the initial amortization schedule.⁴ Two nuances matter. Automatic termination runs on the original schedule, not your actual balance, so extra principal payments don’t move this date forward (they do, though, help you hit the 80% threshold for a borrower-initiated request sooner). And you have to be current on payments when the date arrives. If you’re behind, PMI comes off on the first day of the month after you catch up.

The second is the midpoint of the amortization period. On a 30-year mortgage, that’s the 15-year mark, or month 180. Even when the balance has not reached 78%, which can happen with interest-only periods, modifications, or certain adjustable-rate structures, PMI must terminate at the midpoint as long as you are current.⁴ No borrower pays PMI past the halfway point of the loan.

Loans the lender flagged as “high risk” at origination follow slightly different automatic thresholds: cancellation happens at 77% of original value instead of 78%. The midpoint backstop still applies.⁵

How to Submit the Request

Send the request in writing, dated, addressed to your servicer at the address listed for correspondence on your monthly statement. Keep a copy. Include:

Your loan number and the property address.
A clear statement that you are requesting cancellation of PMI under the Homeowners Protection Act.
A certification that no junior liens exist on the property.
If you are relying on appreciation, a request that the servicer arrange an appraisal, and your acknowledgment that you will pay the appraisal fee.

Track the request. If the servicer needs additional evidence, such as an appraisal, respond promptly, since the clock for the servicer’s decision runs from the date you provide that evidence.

Refunds, Denials, and Filing a Complaint

When cancellation is approved or automatic termination hits, two things happen. Your monthly payment drops by the amount of the PMI premium, and any premiums the servicer collected after the effective cancellation date must be refunded to you within 45 days.⁵

A denial has to come with reasons. The servicer must send you a written notice explaining the specific grounds within 30 days of receiving your request, or within 30 days after you satisfy any evidence requirement such as an appraisal, whichever is later. If the decision relied on an appraisal, the servicer has to share the appraisal results with you.⁵ A generic “you don’t qualify” letter is not enough.

If you think your servicer is violating the Homeowners Protection Act, whether by ignoring a valid request, missing an automatic termination, or refusing to explain a denial, file a complaint with the Consumer Financial Protection Bureau. The CFPB forwards complaints to the company, which generally has to respond within 15 days.⁶ Before filing, pull together your loan documents, the written cancellation request you sent, and any response you received.

When Cancellation Isn’t an Option

Two situations sit outside the rules above, and confusing them for cancelable PMI is common.

Lender-paid PMI (LPMI) is not cancelable by the borrower. Because the insurance cost is baked into a higher interest rate rather than charged as a separate premium, there is nothing to remove without replacing the loan itself. LPMI stays in place until you refinance, pay off the loan, or otherwise end the mortgage.⁵

FHA loans do not carry PMI at all. They have a separate Mortgage Insurance Premium (MIP) with its own rules, and for most FHA borrowers who put less than 10% down, MIP lasts the life of the loan and cannot be canceled through equity growth. The route off FHA mortgage insurance is usually a refinance into a conventional loan once you have enough equity to avoid PMI on the new mortgage.

1
Office of the Law Revision Counsel. 12 USC 4902 – Termination of Private Mortgage Insurance
2
Fannie Mae. Termination of Conventional Mortgage Insurance
3
Office of the Law Revision Counsel. 12 USC 4901 – Definitions
4
Office of the Law Revision Counsel. 12 USC Chapter 49 – Homeowners Protection
5
Consumer Financial Protection Bureau. Homeowners Protection Act PMI Cancellation Act Examination Procedures
6
Consumer Financial Protection Bureau. Submit a Complaint