How to Remove PMI from Your Conventional Loan (Without Refinancing)

If you’re paying Private Mortgage Insurance (PMI) on your conventional loan, you’re probably throwing away $100 to $500 per month depending on your loan amount and down payment.

The good news? PMI isn’t permanent. Once you reach 20% equity in your home, you can get rid of it—and you don’t always need to refinance to make it happen.

Let me show you exactly how to remove PMI and keep that money in your pocket.

Why You’re Paying PMI in the First Place

PMI exists to protect the lender, not you. When you put down less than 20% on a conventional loan, the lender requires PMI to offset their risk if you default.

Your PMI cost depends on three factors:

• Your loan-to-value ratio (LTV)
• Your credit score
• The size of your loan

Lower down payments and lower credit scores = higher PMI costs.

Most borrowers pay between 0.3% and 1.5% of their loan amount annually. On a $400,000 loan, that’s $1,200 to $6,000 per year—money that doesn’t build equity or reduce your principal balance. It’s just insurance for the lender.

The Two Ways PMI Goes Away

There are two paths to PMI removal: automatic and borrower-requested.

Automatic Termination: By law, your lender must automatically cancel PMI once your loan balance reaches 78% of the original purchase price—assuming you’re current on payments. You don’t have to do anything; it happens automatically.

Borrower-Requested Cancellation: You can request PMI removal once you reach 80% LTV (20% equity). This requires action on your part, and it’s almost always faster than waiting for automatic termination.

Here’s why borrower-requested removal matters: the automatic termination is based on your original amortization schedule. If your home has appreciated or you’ve made extra principal payments, you could reach 20% equity years earlier than the scheduled date.

Option 1: Use Your Original Appraised Value

The simplest PMI removal strategy uses your original purchase price and current loan balance.

Let’s say you bought a home for $400,000 with 5% down. Your loan amount was $380,000. To reach 20% equity, you need to pay your loan balance down to $320,000 (80% of $400,000).

Once you hit that mark, you can contact your loan servicer and request PMI removal. They’ll verify:

• Your loan balance is at or below 80% LTV
• Your payment history is current (no late payments in the past year)
• You don’t have subordinate liens (second mortgages or HELOCs)

If you meet these criteria, they’ll remove PMI. No appraisal needed, no cost to you.

The catch? This method only works if you’ve paid down principal. If you’ve been making minimum payments, it might take 10+ years to reach 80% LTV on the original value.

Option 2: Get a New Appraisal (The Faster Method)

This is where things get interesting.

If your home has appreciated, you might already have 20% equity even if your loan balance hasn’t dropped to 80% of the original purchase price.

Here’s an example:

Original purchase price: $400,000
Original loan amount: $380,000
Current loan balance: $370,000 (only $10k paid down)
Current home value: $480,000 (20% appreciation)

Using the original value, you’d need to pay down to $320,000—that’s another $50,000 in principal paydown. But using the current value, 80% LTV is $384,000. You’re already below that.

To use appreciation for PMI removal, you’ll need to order a new appraisal. Policies vary by lender, but most require:

• At least 2 years since loan origination (some allow 12 months)
• Evidence of home value increase (recent comps, market trends)
• Payment history with no late payments
• Appraisal fee ($400-600, paid by you)

If the appraisal confirms you have 20%+ equity, PMI comes off. You’ve just given yourself a permanent monthly raise for a one-time $500 cost.

How to Actually Request PMI Removal

Here’s the step-by-step process:

Step 1: Call your loan servicer (not your original lender—check your monthly statement for the servicing company).

Step 2: Ask about their PMI removal policy. Specifically ask:

• What LTV ratio is required? (Most say 80%, some require 75%)
• Do they accept appraisals for equity-based removal?
• How long must you have had the loan? (Usually 2 years, sometimes 1 year)
• What appraisal companies do they accept?

Step 3: If you’re using the original value method (loan paydown only), request PMI removal in writing. Include your loan number, current balance, and statement that you’ve reached 80% LTV.

Step 4: If you’re using the appraisal method, order an appraisal from an approved company. The servicer will often coordinate this directly.

Step 5: Once the appraisal comes back showing 20%+ equity, submit the report to your servicer along with a written PMI removal request.

Step 6: Wait for confirmation (usually 30-45 days). Your PMI should drop off your next monthly statement.

Common PMI Removal Roadblocks

Not every PMI removal request gets approved. Here are the common reasons for denial:

You’re not current on payments. Even one 30-day late payment in the past 12 months can disqualify you. Stay current.

You have a second mortgage or HELOC. Combined loan-to-value (CLTV) matters. If you have an $80,000 HELOC on top of your primary mortgage, you’ll need to factor that into the equity calculation.

Your home didn’t appraise high enough. If you’re counting on appreciation but the appraisal comes in low, you’re stuck paying PMI until you pay down more principal or property values rise further.

Your loan is too new. Most lenders won’t consider appraisal-based removal until you’ve had the loan for at least 12-24 months. If you just bought six months ago, you’ll have to wait.

Your payment history has issues. Lenders want to see consistent, on-time payments. If you’ve been late multiple times, they’ll deny your request even if you technically meet the LTV requirement.

Making Extra Principal Payments to Speed It Up

If your home value hasn’t appreciated much, making extra principal payments can accelerate your path to 20% equity.

Let’s say you need to pay down your loan from $370,000 to $320,000—a $50,000 gap. If you make an extra $500 principal payment every month, you’ll reach that goal in about 7-8 years instead of 11+ years.

Even one-time lump sum payments help. Got a work bonus, tax refund, or inheritance? Throwing that money toward principal immediately reduces your LTV and gets you closer to PMI removal.

Just make sure you specify the payment is for principal only—otherwise, your servicer might apply it to future interest instead.

What If Your Lender Refuses?

Some loan servicers make PMI removal unnecessarily difficult. They’ll drag their feet, impose unreasonable requirements, or flat-out deny legitimate requests.

If you’ve met the requirements and your servicer won’t cooperate, you have options:

File a complaint with the Consumer Financial Protection Bureau (CFPB). Servicers hate CFPB complaints, and they often reverse denials quickly to avoid regulatory scrutiny.

Refinance to remove PMI. If your home has appreciated significantly and rates haven’t risen much, refinancing into a loan with 20%+ equity eliminates PMI entirely. Yes, you’ll pay closing costs, but it might be worth it if you’re saving $300-500/month.

Switch servicers through refinance. Even if rates are slightly higher, getting rid of PMI and moving to a more responsive servicer can improve your financial situation and sanity.

For more on refinancing strategies, including cash-out refinance options that eliminate PMI while accessing equity, explore your options with licensed loan officers who specialize in conventional loans.

Don’t Wait for Automatic Removal

Here’s the bottom line: if you wait for automatic PMI termination at 78% LTV, you’re leaving money on the table.

Most borrowers can request removal at 80% LTV, and many can use appreciation to qualify even sooner. That’s months or years of unnecessary PMI payments.

Check your loan balance and home value today. If you’re close to 20% equity, start the removal process. The worst they can say is “not yet”—and then you’ll know exactly what you need to do to qualify.

Need help understanding your equity position or exploring refinance options to eliminate PMI? Visit Browse Lenders to connect with verified conventional loan officers who can walk you through your specific situation and show you the fastest path to PMI freedom.