Private mortgage insurance (PMI) is an insurance premium a borrower pays that protects the lender against loss if the loan defaults. It is commonly required when a down payment is under 20%.
Where you'll see it
As a line item in your monthly mortgage payment, and in your closing documents. The two numbers that matter — 80% and 78% — are both measured against your home's original value, not its current market value.
The rule behind it
You have the right to ask your servicer to cancel PMI on the date the principal balance of your mortgage is scheduled to fall to 80 percent of the original value of your home.
Yes. Even if you don't ask your servicer to cancel PMI, in general, your servicer must automatically terminate PMI on the date when your principal balance is scheduled to reach 78 percent of the original value of your home.
The information below describes the legal requirements that apply to mortgages for single-family principal residences that closed on or after July 29, 1999.
The 80% route isn't automatic: the statute requires a request in writing, and attaches conditions — good payment history, no junior liens, and evidence the home's value hasn't declined. FHA and VA loans are not covered by this right.
Consumer info, not financial advice.