PMI Cancellation: 80% Requests, 78% Automatic Termination and the Right Home Value

Two thresholds, two different procedures

For covered US conventional mortgages, 80% is the borrower-requested cancellation threshold; 78% generally triggers automatic termination on the scheduled date, not whenever an extra payment pushes the actual balance below that percentage. Both use the home's original value, not an online estimate of today's selling price.[1][2] Identify the route before sending money.

Establish the original-value denominator

For a purchase, original value generally means the lower of the contract sales price and the appraisal at purchase. For a refinance, it means the appraisal at refinancing.[1] It is not the original loan amount. Record the applicable value, unpaid principal, PMI premium and scheduled termination date separately.

Hypothetically, a home bought for $400,000 and appraised at $410,000 has an original value of $400,000. The 80% balance is $320,000; the 78% balance is $312,000. A later $450,000 estimate does not rewrite those original-value thresholds.

At 80%, submit a request and satisfy conditions

You can request cancellation when the balance is scheduled to reach 80%, or earlier when extra principal payments bring it there. The federal route requires a written request, good payment history and current payments. The lender may require certification of no junior liens and evidence that the property has not declined below original value.[1][2]

Thus, an appraisal can be relevant even when you are not claiming appreciation: it may establish that value has not fallen. Ask the servicer what evidence it accepts before commissioning a valuation. Crossing the numerical threshold alone does not establish eligibility.

At 78%, check the schedule rather than your accelerated balance

For a covered fixed-rate loan, automatic termination follows the initial amortization schedule and requires current payments. Adjustable-rate loans use the schedule then in effect. The automatic rule does not impose the requested-cancellation tests concerning declining value or subordinate liens.[2] Paying down to 78% early therefore does not itself advance the statutory automatic date; use the request route instead.

A separate backstop generally ends PMI after the amortization midpoint if payments are current. Loan modifications can require recalculating cancellation and termination dates.[2] Obtain the applicable dates rather than estimating them from your latest statement.

Appreciation is a separate investor-policy route

Current-value cancellation is not the same federal 80% entitlement. For example, Fannie Mae's guide for a one-unit principal residence or second home requires current-value LTV of 75% or less for loans seasoned between two and five years, or 80% or less after five years. Payment-history and valuation requirements also apply; qualifying improvements can support a seasoning exception.[3] These are Fannie Mae rules, not universal lender terms.

In the hypothetical purchase above, a $326,000 balance divided by $450,000 is about 72.44%. That arithmetic neither validates the estimate nor promises approval. Ask who owns the loan and which current-value policy applies.

Evaluate extra principal without calling it a fee

Assume that same $326,000 balance, a hypothetical $90 monthly PMI premium, a hypothetical $300 required valuation cost and twelve premiums otherwise remaining. Paying $6,000 would reach $320,000. If cancellation actually eliminates all twelve premiums, gross avoided PMI is $1,080 and the amount after the valuation expense is $780. The valuation-only recovery period is $300 ÷ $90, or 3.33 months: four whole avoided premiums.

The $6,000 is debt reduction, not a consumed fee; nevertheless, it leaves liquid savings. Do not present $6,000 ÷ $90 as an investment payback. Compare interest avoided, forgone cash returns, emergency reserves, other debts and the months you will actually keep this loan. Processing delays or denied cancellation reduce the illustrated benefit. None of these figures is a current quote.

Confirm the result and the boundaries

Before paying extra, obtain the eligibility checklist, accepted valuation process, costs and principal-posting instructions. After requesting cancellation, retain the response and check subsequent statements; do not reduce payments yourself. This guide concerns borrower-paid PMI on non-high-risk single-family principal-residence loans closed on or after July 29, 1999. FHA MIP, VA loans, lender-paid insurance and high-risk exceptions are outside this analysis.[1][2]

Sources checked September 23, 2026: CFPB shows review on August 28, 2026; Fannie Mae's topic is dated May 15, 2019; no publication date is assigned here to the FDIC page. These explain rules, not individual approval or live fees.