What PMI Costs You Every Month (And Exactly When It Comes Off)

Your mortgage statement has a $210 line for insurance that pays your lender if you stop paying. You search what is PMI on your phone. The usual answer is that it comes off at 20 percent equity. That answer needs more detail: 20 percent of what?

So you look up what the house is worth. The listing sites say it has gained $60,000 since you bought it. You call the servicer to cancel, and the servicer says no. Your servicer measures against the price you paid, which is in your closing disclosure.

What 20 percent is measured against

Private mortgage insurance is measured against original value, which the Consumer Financial Protection Bureau defines as the lower of the contract sales price or the appraised value at the time you bought. That number is fixed at closing. It does not change when your house gains value. Under the Homeowners Protection Act, only your loan balance counts.

The 20 percent rule has two removal points. At 80 percent of original value you can request cancellation. At 78 percent of original value your servicer must cancel it, as long as you are current on payments.

The arithmetic for one loan

Take a $400,000 purchase with $40,000 down. The loan is $360,000 over 30 years at 6.5 percent. Original value is $400,000, because that is both what you paid and what it appraised for.

Principal and interest come to $2,275.44 a month, of which the first payment is $1,950.00 of interest and $325.44 of principal. Mortgage insurance at 0.7 percent of the loan a year, inside the 0.6 to 0.9 percent band most borrowers pay, adds $2,520 a year. That is the $210 on the statement. The CFPB publishes no cost range for it, so your own percentage comes off the closing disclosure.

Eighty percent of $400,000 is $320,000. Seventy eight percent is $312,000. Say you closed in March 2026, so payment one was due in April 2026.

Removal point	Balance required	Payment	Month	Who acts
You request cancellation	$320,000	95	February 2034	You, in writing
Automatic termination	$312,000	109	April 2035	Your servicer

Payments 96 through 109 fall between those two rows. Fourteen premiums at $210 each is $2,940.

The 80 percent request has four conditions, which the CFPB lists: in writing, current with a good payment history, no junior liens on the property, and a value that has not dropped below original value. The 78 percent termination has none of them. Your servicer owes you that one.

If a loan pays down slowly and the balance never reaches 78 percent on schedule, the Homeowners Protection Act sets a last end date at the month after the midpoint of the amortization schedule, and the CFPB puts that at 15 years in on a 30 year loan.

When today's value counts

Original value is the number the Homeowners Protection Act uses. The company that owns your loan can apply its own rules on top, and those can use today's value.

Fannie Mae's Servicing Guide lets a borrower request cancellation against the property's current value. Loan to value here means the balance divided by a current appraisal. The price you paid does not enter it. On a one unit principal residence or second home the threshold is 75 percent between two and five years after closing, and 80 percent after five years. The payment record has to be clean: current, no payment 30 or more days past due in the past 12 months, and none 60 or more days past due in the past 24 months.

Call the servicer and ask who owns your loan, then ask which cancellation rules that owner uses. The answer decides whether the $60,000 counts.

FHA loans run on their own schedule

Everything above is the conventional answer to what is PMI. FHA charges a mortgage insurance premium instead, and treating it like conventional PMI will cost you years.

HUD's Handbook 4000.1 sets the duration for case numbers assigned on or after June 3, 2013. The annual premium runs 11 years when the original loan to value was 90 percent or less. Above 90 percent it runs for the mortgage term, so a buyer who put 3.5 percent down pays it as long as the loan lasts.

On those case numbers HUD cancels on that schedule, so paying the balance down early does not shorten it. Case numbers assigned before June 3, 2013 kept a borrower request at 78 percent, with two conditions: at least five years since closing, except on 15 year terms, and no payment more than 30 days late in the previous 12 months. Your closing disclosure names the loan type.

Refinancing into a conventional loan ends the premium and replaces your interest rate at the same time. Price the new rate against the $210 before you do it.

What to do this week

If you searched what is PMI because a new line showed up on your statement, start with the closing disclosure. Write down the lower of the price you paid and the appraised value. That is your original value. Multiply it by 0.80 and by 0.78. Then pull the amortization schedule from your online servicing account and find the payment number where your scheduled balance first drops under each figure. Put the earlier date in your calendar with enough warning to draft the request.

Extra principal payments bring the balance to $320,000 sooner and move the request date forward. They do not move the automatic date, which runs off the original schedule whatever you prepay. A refinance resets original value to the new appraised value.

Go back to the statement. That $210 line ends in February 2034 if you write the letter and April 2035 if you do not. The letter is worth $2,940.