Key points:

• The Homeowners Protection Act of 1998 requires automatic PMI cancellation at 78% loan-to-value (LTV) and allows you to request it at 80%,
• PMI laws apply only to conventional loans, not FHA, USDA, or VA loans.
• You may be able to remove PMI early with a new appraisal if your home has increased in value.

What are the laws about removing PMI?

When you buy a home with less than a 20% down payment, your lender will typically require private mortgage insurance (PMI). 

This protects the lender if you default on your loan, but it increases your monthly payment. The good news? PMI doesn’t last forever — and the laws about removing PMI give you several ways to cancel it when your loan meets certain conditions.

The primary law that governs PMI cancellation is the Homeowners Protection Act of 1998 (HPA). This federal law sets standard rules for when lenders must remove PMI from conventional loans. It gives borrowers both automatic and borrower-initiated options for cancellation and prohibits lenders from requiring PMI indefinitely.

Understanding these laws can help you plan ahead, save money, and take control of your mortgage.

When PMI is automatically removed

Under the Homeowners Protection Act, lenders must automatically cancel PMI on conventional loans when your loan balance reaches 78% of the original value of your home, provided you’re current on your mortgage payments. “Original value” means the lesser of your purchase price or appraised value at the time you took out the loan.

Let’s say you bought a home for $300,000 and put down 10% ($30,000), leaving a loan balance of $270,000. Your lender must automatically cancel PMI once your principal balance hits $234,000 (78% of $300,000), assuming your payments are up to date.

You don’t need to request this cancellation — it’s triggered automatically based on your loan amortization schedule. However, you must be current on your mortgage for the lender to proceed.

How to request PMI cancellation at 80%

The HPA also gives you the right to request PMI cancellation once your loan balance reaches 80% of the home’s original value. This gives you a way to ditch PMI sooner than if you wait for it to automatically fall off. 

To qualify for borrower-initiated cancellation:

• You must have a good payment history (typically no late payments in the past year)
• You must be current on your loan
• Your lender may require a current appraisal to confirm the home hasn’t declined in value
• Your loan must not be subject to other risk factors (e.g., it’s not a high-risk loan)

If approved, your lender must terminate PMI on the date the balance hits 80%, or soon after your request.

Can PMI be removed based on current home value?

Maybe. Many lenders allow PMI cancellation based on the home’s current appraised value, even though this is not required by the HPA. If your home has appreciated significantly since you bought it, this strategy could help you reach the 80% loan-to-value (LTV) ratio threshold faster.

Say, for example, that you purchased your home for $300,000 and owe $255,000 (85% LTV). Thanks to market appreciation, your home is now worth $365,000. At that value, your current LTV is about 70% — and you may be eligible to remove PMI.

This route usually requires:

• A professional appraisal (paid for by you)
• On-time mortgage payments
• Sufficient time elapsed since you closed (often 2+ years, but varies by lender)

Keep in mind, these guidelines aren’t part of the federal law — they're lender-specific. So it’s best to contact your mortgage servicer to learn their requirements for PMI removal based on current value.

Loans not covered by PMI removal laws

It’s important to note that the laws about removing PMI only apply to conventional loans. FHA loans have a separate type of mortgage insurance that requires an MIP (mortgage insurance premium), and it follows different rules.

For most FHA loans:

• If you put down less than 10%, MIP lasts for the life of the loan.
• If you put down 10% or more, MIP is required for at least 11 years.

You can’t remove FHA MIPs by hitting a certain LTV or requesting cancellation. Instead, you must refinance into a conventional loan if you want to eliminate monthly mortgage insurance.

VA loans, which are available to eligible veterans and service members, don’t require PMI at all.

Your responsibilities under the HPA

While the HPA protects you as a borrower, it also places some responsibilities on your shoulders:

• You must make a formal request in writing to initiate PMI cancellation at 80% LTV
• You may need to pay for an appraisal or property inspection if required
• You must be current on your loan and have a clean payment history

You also have the right to:

• Receive annual written notice of your PMI cancellation rights
• Get confirmation when PMI is canceled
• File a complaint with the Consumer Financial Protection Bureau (CFPB) if you believe your rights are being violated

By staying informed and proactive, you can avoid paying PMI longer than necessary.

The good news about PMI

The laws about removing PMI are clear: if you have a conventional mortgage, you don’t have to pay private mortgage insurance forever. The Homeowners Protection Act of 1998 ensures that lenders cancel PMI automatically when your loan reaches 78% of the original home value and allows you to request cancellation at 80%. You may even qualify for early removal based on your home’s current market value.

However, it’s up to you to know your loan’s terms, track your balance, and take action when eligible. And remember — FHA and VA loans follow different rules.

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