How to Get Rid of PMI: Strategies to Remove or Avoid Mortgage Insurance

Private mortgage insurance (PMI) can add hundreds—or even thousands—of dollars to your annual housing costs. The good news? You’re not stuck with it forever. Whether you’re looking to get rid of PMI on an existing loan or avoid it altogether before you buy, this guide will walk you through your options.

We’ll break down how PMI works, how to remove it, and what strategies you can use to sidestep it entirely.

What Is PMI and When Do You Pay It?

PMI is required on most conventional loans when your down payment is less than 20%. It protects the lender—not you—if you default on the loan. Most borrowers pay PMI monthly, but there are other structures like lender-paid PMI (LPMI) and single premium PMI that frontload or bundle the cost differently.

How to Get Rid of PMI After You’ve Closed

If you already have PMI, you might be able to cancel it early—or take steps to eliminate it through refinancing or equity growth. Here’s how.

1. Wait for Automatic Cancellation

Under the Homeowners Protection Act, lenders are required to automatically cancel PMI once your loan balance reaches 78% of the original value of your home. This happens if you stay current on payments and don’t refinance or modify your loan.

This method requires no action—but can take years, especially on 30-year mortgages.

2. Request PMI Cancellation at 80% LTV

You don’t have to wait for 78%. You can request PMI removal once you reach 80% loan-to-value (LTV) based on the original purchase price or appraised value. You’ll usually need to:

• Have a good payment history

• Submit a formal written request

• Possibly pay for a new appraisal

This is often triggered faster by making extra principal payments.

3. Refinance Into a New Loan Without PMI

If your home has appreciated significantly—or you’ve paid down a large chunk of your loan—you may be able to refinance into a new loan without PMI. This is especially useful if:

• Your credit score has improved

• You qualify for a better interest rate

• You want to switch loan terms anyway

You can use a tool like the Mortgage Refinance Calculator to estimate whether this approach will save you money.

4. Pay Extra Toward Your Loan to Reach 80%

Want to take control of your timeline? Consider making extra payments toward your principal. Even small additional payments each month can accelerate your path to PMI cancellation.

For example, adding just $100/month on a $250,000 loan can eliminate PMI nearly 2 years sooner.

How to Avoid PMI Before You Buy

If you’re still in the market for a home—or planning your financing—you may be able to avoid PMI completely. Here are the most effective strategies.

To estimate what PMI might cost—or how much you could save using one of these strategies—check out our PMI Calculator.

1. Make a 20% Down Payment

This is the most straightforward way to avoid PMI: put down at least 20% on your conventional mortgage. Not always easy—but sometimes worth delaying your purchase to save up.

2. Use Lender-Paid Mortgage Insurance (LPMI)

LPMI bundles the cost of PMI into your interest rate. You’ll pay slightly higher interest, but won’t have a monthly PMI payment. This can make sense if:

• You plan to sell or refinance within a few years

• You prefer a higher rate over upfront or monthly costs

Be aware that you can’t cancel LPMI—it’s baked into the loan.

3. Choose Single Premium PMI

With this option, you pay PMI as a one-time upfront fee at closing (or roll it into your loan). It can be cheaper than monthly PMI if you stay in the home long enough—but more expensive if you sell or refinance early.

4. Use a Piggyback Loan (80/10/10)

This strategy involves taking out a first mortgage for 80%, a second mortgage for 10%, and putting 10% down. This lets you avoid PMI while still putting less than 20% down.

This strategy works best if you qualify for favorable terms on both loans and plan to stay in the home long-term.

5. Compare LPMI vs BPMI

Choosing the right structure can save you thousands over the life of your loan.

Which PMI Strategy Is Best for You?

There’s no one-size-fits-all answer. Your best move depends on:

• How long you plan to stay in the home

• Your credit score and loan terms

• Whether you’re buying now or already have PMI

• How soon you can reach 20% equity

Use real numbers, not guesses, to evaluate the savings. Tools like Loan Compass or your lender’s PMI calculator can help you run the math on refinance scenarios or upfront payment comparisons.

FAQs – How to Get Rid of PMI