When and How Mortgage Insurance Can Be Removed: A Timeline

Overview

Mortgage insurance lets buyers with smaller down payments get mortgages, but it adds ongoing cost. Understanding the removal timeline — when your lender must stop PMI or when FHA MIP can be removed — helps homeowners reduce their monthly payments sooner. Based on 15 years in the lending industry, this guide lays out the legal triggers, practical steps, and common pitfalls for canceling mortgage insurance.

Types of mortgage insurance and why the timeline matters

• Private Mortgage Insurance (PMI): Applies to most conventional loans when the borrower’s down payment is less than 20%. PMI protects the lender and is usually paid monthly, as a single upfront premium, or embedded in the interest rate.
• FHA Mortgage Insurance Premium (MIP): Required on FHA loans. Rules for removal are different from PMI and depend heavily on when the loan was originated.

Both types increase monthly costs. Knowing the timeline for removal helps you plan principal prepayments, appraisals, or refinancing to eliminate the premium.

Sources: Consumer Financial Protection Bureau (CFPB) guidance on PMI and HUD/FHA MIP guidance (CFPB, HUD/FHA 2025).

Legal triggers: what federal rules require

• Homeowners Protection Act (HPA) — conventional PMI: Under the HPA, borrowers have two main protections.

• Borrower-request cancellation: You can request PMI cancellation when your loan’s unpaid principal balance reaches 80% of the original value (80% LTV), provided you meet certain conditions (timely payments, no subordinate liens, and sometimes documentation of property condition). Lenders must comply with reasonable requests (see CFPB).

• Automatic termination: Lenders must terminate PMI automatically when your balance reaches 78% of the original value (78% LTV), assuming you are current on payments and the loan is in good standing. (HPA; CFPB summary.)

• FHA MIP rules: FHA mortgage insurance rules differ. For most FHA loans with case numbers assigned on or after June 3, 2013, annual MIP is required for the life of the loan if the original LTV was greater than 90%. If the original down payment was at least 10% (original LTV ≤90%), MIP can be canceled after 11 years. If your FHA loan predates June 3, 2013, other cancellation rules may apply. Always confirm with HUD/FHA guidance for your loan’s case number date (HUD/FHA, 2025).

How lenders and investors measure LTV (original vs current vs combined)

• Original LTV (OLTV): Loan amount at closing divided by original purchase price or appraised value used at origination — this governs automatic termination under HPA.
• Current LTV (CLTV/Current LTV): Remaining principal divided by current market value. Borrowers often ask lenders to remove PMI based on current LTV if the home has appreciated.
• Combined LTV (CLTV): Includes second liens or home equity lines of credit (HELOCs). Even if your first mortgage is under 80% on its own, a second lien can push CLTV above 80% and block PMI removal. See our glossary on Combined LTV for details: “Combined LTV (CLTV) and Its Effect on Refinance Eligibility” (https://finhelp.io/glossary/combined-ltv-cltv-and-its-effect-on-refinance-eligibility/).

Common ways PMI or MIP is removed — timeline scenarios

1. Automatic termination (Conventional PMI)

• Trigger: Original unpaid balance reaches 78% of original value.
• Condition: Borrower must be current on payments; borrower generally cannot have a second lien that changes the effective risk to the lender.
• Timing: Determined by the amortization schedule — typically around 7–12 years depending on interest rate and initial LTV.

1. Borrower-request cancellation (Conventional PMI)

• Trigger: Borrower reaches 80% original LTV and requests cancellation.
• Requirements: Usually 12 months of timely payments, good payment history, and lender’s determination that the property’s value has not declined. Lenders can require an appraisal or other evidence of value.
• Steps: Submit a written request to the servicer with proof of on-time payments and, if requested, an appraisal.

1. Reappraisal or home value evidence

• If your home has appreciated, you can ask the lender to use a new appraisal or comparable market evidence to show current LTV is ≤80%.
• Lenders may require a full appraisal; you will likely pay the appraisal cost.

1. Refinance to remove PMI

• If rates or equity conditions are favorable, refinancing into a conventional loan without PMI is often the fastest way to drop mortgage insurance permanently. See our “Mortgage Refinance Checklist” (https://finhelp.io/glossary/mortgage-refinance-checklist/) and “How Rate-and-Term Refinance Lowers Monthly Payments” (https://finhelp.io/glossary/how-rate-and-term-refinance-lowers-monthly-payments/) for step-by-step considerations.

1. FHA borrowers — special timeline

• For FHA loans with a case number on or after June 3, 2013 and original LTV > 90%: MIP lasts for life (no cancellation); removal generally requires refinancing to a conventional loan.
• For loans with original LTV ≤ 90%: MIP stops after 11 years.
• Check HUD/FHA guidance and your loan documents to determine which rule applies to your loan (HUD/FHA, 2025).

Practical step-by-step timeline and checklist to request PMI removal

1. Check your original loan paperwork for original value and whether your loan is conventional or FHA.
2. Pull an up-to-date mortgage statement and confirm your current principal balance.
3. Estimate current home value using recent sale comps, Zillow/Redfin (as a starting point), or order a professional appraisal if you suspect appreciation.
4. Calculate current and original LTV:

• Original LTV = original loan amount ÷ original value.
• Current LTV = current loan balance ÷ current market value.

1. Confirm you meet HPA conditions: at least 12 months of payments and no late payments in past 12 months (lender specifics may vary).
2. Contact your loan servicer in writing to request PMI cancellation and ask what documentation they require (appraisal, title search showing no subordinate liens, payment history).
3. If required and economically sensible, order an appraisal and send documentation to the servicer.
4. If the servicer refuses, request a statement of reasons in writing; consider escalating to the lender’s loss-mitigation or investor liaison or filing a complaint with the Consumer Financial Protection Bureau (CFPB).

Costs and refunds

• Appraisal costs: If you request a valuation, you usually pay for the appraisal.
• Refunds: Some types of upfront mortgage insurance (notably certain FHA UFMIP scenarios) may be partially refundable if the mortgage is paid or refinanced within a short window; policies differ. For conventional monthly PMI, refunds are uncommon because the monthly premium simply stops after cancellation. Check HUD/FHA and servicer policy for UFMIP refund rules.

Common mistakes that delay removal

• Not monitoring LTV or home appreciation regularly.
• Ignoring second liens or HELOCs that increase combined LTV.
• Assuming FHA MIP behaves like conventional PMI — it often does not.
• Failing to send a written cancellation request and follow up.

Example timeline (illustrative)

• Purchase with 10% down (90% OLTV): PMI required at closing.
• Years 1–4: Regular payments; LTV falls with amortization and any principal prepayments.
• Year 5 (if payments + appreciation bring current LTV to 80%): Borrower requests PMI cancellation and supplies appraisal; servicer approves; PMI stops.
• Year 7–9 (without appreciation but consistent amortization): Automatic termination at 78% OLTV occurs if borrower meets HPA conditions.

Actual timing will vary by interest rate, amortization schedule, and whether you make extra principal payments.

When to consider refinancing instead

Refinancing is the most reliable route to remove insurance if refinancing makes financial sense (lower rate, lower total cost, or switching from FHA to conventional). Use the refinance checklist to compare costs and benefits (see our “Mortgage Refinance Checklist” for details). Remember to include closing costs and the potential for resetting the amortization timeline.

Frequently asked quick answers

• How soon can I ask to cancel PMI? When your original LTV reaches 80%, assuming you meet payment history and property condition requirements. (HPA/CFPB)
• Does PMI automatically end? Yes, at 78% OLTV if you are current. (HPA)
• Can FHA MIP be removed? Often not if the loan post-dates June 3, 2013 and original LTV > 90%; removal may require refinance. (HUD/FHA)

Final tips from my lending experience

• Track your amortization schedule yearly—small extra principal payments can shave years off your PMI timeline.
• If you’ve done substantial renovations or the market has risen, a professional appraisal may be worth the cost to remove PMI sooner.
• Keep written records of all requests and communications with your servicer; if you get a denial, ask for a written explanation and the investor reason code.

Sources and further reading

• Consumer Financial Protection Bureau (CFPB), “Private Mortgage Insurance (PMI)” and guidance on cancelling PMI (CFPB, 2025).
• HUD / Federal Housing Administration (FHA), Mortgage Insurance Premium (MIP) rules (HUD/FHA, 2025).

For help deciding whether to request cancellation, order an appraisal, or refinance, review a detailed refinance checklist and rate/term considerations: “Mortgage Refinance Checklist” (https://finhelp.io/glossary/mortgage-refinance-checklist/), and “How Rate-and-Term Refinance Lowers Monthly Payments” (https://finhelp.io/glossary/how-rate-and-term-refinance-lowers-monthly-payments/).

Professional disclaimer: This article is educational and based on industry practice; it does not constitute individualized financial or legal advice. Consult a mortgage servicer, FHA lender, or certified financial planner for guidance tailored to your situation.