Private Mortgage Insurance (PMI) is insurance required on most conventional loans when the borrower puts down less than 20%. It protects the lender, not the borrower, in the event of default. According to the CFPB, lenders require PMI when a down payment is less than 20% of the sales price or appraised value of the home.

How can I remove PMI from my mortgage?

There are three ways to remove PMI under the Homeowners Protection Act of 1998 (12 U.S.C. § 4901): (1) PMI automatically terminates at 78% loan-to-value under 12 U.S.C. § 4902(b) — no action required. (2) You can submit a written cancellation request at 80% LTV under 12 U.S.C. § 4902(a), with a good payment history and supporting appraisal. (3) You can refinance into a new conventional loan at 80% LTV or below, which removes PMI immediately.

What is the difference between PMI and MIP?

PMI applies to conventional loans and is governed by the Homeowners Protection Act — it is cancellable at 80% LTV by written request and automatically terminates at 78% LTV. MIP (Mortgage Insurance Premium) applies to FHA loans under HUD guidelines and may last for the life of the loan if less than 10% was put down. The HPA does not apply to FHA loans. The fastest way to eliminate FHA MIP is to refinance into a conventional loan once sufficient equity is reached.

How much does PMI cost per month?

PMI typically costs between 0.3% and 1.5% of the loan amount annually. On a $400,000 loan at 0.70%, that works out to approximately $233 per month.

Is PMI tax deductible in 2026?

Yes. Under Section 70108 of the One Big Beautiful Bill Act (Public Law 119-21), signed July 4, 2025, PMI and FHA MIP are permanently treated as deductible qualified residence interest on Schedule A beginning January 1, 2026. The deduction phases out between $100,000 and $110,000 in adjusted gross income. Consult a tax professional for your specific situation.

Can home appreciation help me remove PMI early?

Yes. Under 12 U.S.C. § 4902(a), you can submit a written request to cancel PMI once you reach 80% LTV based on the original property value. If your home has appreciated, an updated appraisal or broker price opinion can support that request, potentially eliminating PMI years ahead of the automatic termination date.

What Is PMI and How Do I Remove It?

By Wayne Wallace, SVP of Mortgage Solutions • Updated June 2026

If you’re planning to buy a home — or if you already have a mortgage — you may have heard the term PMI. Many buyers aren’t sure what PMI is, why they’re paying it, or how to get rid of it. This guide explains everything you need to know about Private Mortgage Insurance, including how it works, how much it costs, the exact steps to remove it when eligible, and a brand-new tax benefit that took effect in 2026.

What Is PMI?

Private Mortgage Insurance (PMI) is a type of insurance required on most conventional loans when the buyer puts down less than 20% on a home purchase. PMI protects the lender — not the borrower — in case of default, but it does allow buyers to purchase a home without waiting to save a full 20% down payment.

As the Consumer Financial Protection Bureau (CFPB) explains, lenders generally require PMI when a borrower’s down payment is less than 20% of the sales price or appraised value of the home, with premiums added to the monthly mortgage payment.

PMI is not required for:

VA loans — zero monthly mortgage insurance
USDA loans — uses a different guarantee fee structure
FHA loans — uses MIP (Mortgage Insurance Premium) instead of PMI

How Much Does PMI Cost?

PMI is based on several factors including your credit score, loan amount, down payment, and loan type. Premiums usually range between:

0.3% to 1.5% of the loan amount annually

Example:

Loan Amount: $400,000
PMI Rate: 0.70%
Annual PMI Cost: $400,000 × 0.007 = $2,800/year
Monthly PMI Cost: $2,800 ÷ 12 = $233/month

🆕 PMI Is Tax-Deductible Again in 2026

This is significant news for homeowners paying PMI: mortgage insurance premiums are now permanently tax-deductible, starting with tax year 2026.

Under Section 70108 of the One Big Beautiful Bill Act (Public Law 119-21), signed July 4, 2025, PMI and FHA MIP are now treated as deductible qualified residence interest on Schedule A — the same pathway as traditional mortgage interest. The deduction applies to premiums paid on or after January 1, 2026, and phases out between $100,000 and $110,000 in adjusted gross income (AGI).

According to U.S. Mortgage Insurers (USMI), when a similar deduction was previously in effect (2007–2021), approximately 4 million homeowners claimed it annually, with an average deduction of roughly $1,454 per eligible taxpayer. This restoration is a meaningful win for first-time buyers — who account for roughly 65% of private MI borrowers.

What this means for you: Every PMI or MIP premium you pay in 2026 is accumulating toward a deduction you’ll claim when you file your 2026 return in spring 2027. Consult a tax professional regarding your specific eligibility.

When Does PMI Apply?

You’ll typically pay PMI when:

Your down payment is less than 20%
You’re using a conventional mortgage
Your lender requires risk-based pricing due to credit or debt-to-income factors

PMI automatically ends once certain equity thresholds are reached — but you may be able to remove it sooner by request.

How to Remove PMI: 3 Paths

Federal law provides clear rights for PMI cancellation. The Homeowners Protection Act of 1998 (HPA), 12 U.S.C. § 4901 et seq. — also known as the “PMI Cancellation Act” — was signed into law on July 29, 1998 specifically to address borrowers’ difficulties in canceling PMI once they had reached sufficient equity. It applies to residential mortgages originated on or after July 29, 1999.

1. PMI Automatically Ends at 78% LTV

Under 12 U.S.C. § 4902(b) of the Homeowners Protection Act:

PMI must automatically terminate when the loan balance is first scheduled to reach 78% of the original property value (the lesser of purchase price or appraised value at origination)
For fixed-rate loans, this is calculated based on the initial amortization schedule; for adjustable-rate loans, on the schedule then in effect
If you are not current on the scheduled termination date, automatic termination occurs on the first day of the first month after you become current
You don’t need to request this — your lender is legally required to cancel PMI and return any unearned premiums collected after the cancellation date

The CFPB has noted that lenders failing to promptly cancel PMI can result in borrowers paying significant unnecessary premiums, and has examined servicers specifically for compliance with these HPA termination requirements.

2. Request PMI Removal at 80% LTV

Under 12 U.S.C. § 4902(a), you have the right to submit a written request to cancel PMI once your loan reaches 80% LTV based on the original value of the property — potentially years ahead of the automatic 78% termination date. To qualify, you must:

Have a good payment history (generally, no 60-day late payments in the prior 24 months and no 30-day late payments in the prior 12 months)
Provide evidence of current value, such as an updated appraisal or broker price opinion (BPO), if your lender requires it
Certify that no subordinate liens (second mortgages, HELOCs) exist on the property

Your lender is required to respond to your written cancellation request in writing. Early cancellation can happen faster through extra principal payments, home appreciation, or a combination of both.

Note: The HPA does carve out “high-risk” loans from standard cancellation rules. If your loan was designated high-risk at origination, your lender may apply different thresholds — check your original loan disclosures.

3. Refinance to Remove PMI

If your property value has increased significantly, refinancing into a new conventional loan without PMI may be the fastest option. Home appreciation can push you below the 80% LTV threshold even if you didn’t put down 20% originally.

Refinancing removes PMI immediately if your new loan meets the 80% LTV requirement — and may also lower your interest rate at the same time. Texas markets in particular have seen substantial appreciation; many homeowners who purchased with 5–10% down now have well over 20% equity without making a single extra payment.

Your Rights Under the HPA: Required Disclosures

The Homeowners Protection Act also establishes disclosure requirements your lender must follow:

At closing: You must receive a written disclosure identifying the projected date your loan will reach 80% LTV (your cancellation request date) and the projected date it will automatically reach 78% LTV (the termination date), based on your amortization schedule
Annual notices: For as long as PMI remains on your loan, your servicer must send you an annual written statement reminding you of your cancellation rights and how to submit a request
Upon cancellation or termination: Your lender must notify you in writing when PMI has been removed

If you believe your PMI should have been canceled and wasn’t, you can file a complaint with the CFPB at consumerfinance.gov/complaint or contact your state’s mortgage regulator.

PMI vs. MIP: What’s the Difference?

Some borrowers confuse PMI with MIP (Mortgage Insurance Premium). They serve a similar protective function for lenders but operate under entirely different rules:

PMI → Conventional loans — governed by the Homeowners Protection Act — cancellable at 80% LTV by request, automatically terminated at 78% LTV
MIP → FHA loans — governed by HUD/FHA guidelines — may last for the life of the loan depending on your down payment and origination date

Unlike PMI, FHA’s annual MIP may continue for the life of the loan if you put down less than 10%, unless you refinance into a conventional loan. The Homeowners Protection Act does not apply to FHA-insured mortgages.

Can I Remove FHA Mortgage Insurance (MIP)?

Yes — but the process is different from conventional PMI removal. Under current FHA/HUD guidelines:

If you put down 10% or more (LTV ≤ 90% at origination): annual MIP lasts for 11 years, then drops off automatically
If you put down less than 10% (LTV > 90% at origination): annual MIP lasts for the life of the loan
FHA also charges an upfront MIP of 1.75% of the loan amount, which is typically financed into the loan at closing

The fastest way to remove FHA MIP is to refinance into a conventional loan once you reach 20% equity. With home values in North Texas having risen substantially, many FHA borrowers are surprised to discover they already qualify.

Note: If your FHA loan originated before June 3, 2013, older HUD guidelines may apply — consult your servicer or a HUD-approved housing counselor (hud.gov/counseling) to review your specific cancellation options.

How Rising Home Values Help You Remove PMI Faster

In many North Texas markets — including Collin County, Grayson County, and the greater DFW metro — home values have risen enough that homeowners reach 20% equity far sooner than expected. Even a modest 5–10% increase in value can eliminate PMI years ahead of schedule.

An updated appraisal or broker price opinion (BPO) may be all you need to submit a written cancellation request under 12 U.S.C. § 4902(a). I can walk you through whether this makes sense for your specific situation and help you prepare the request.

Ready to Find Out If You Can Remove PMI?

If you’re unsure whether you qualify for PMI removal, whether refinancing might make sense, or how the new 2026 tax deduction applies to your situation, I can prepare a personalized analysis. Removing PMI can often save homeowners $150–$400 per month depending on loan size — and with the PMI deduction now restored, the calculus around keeping vs. removing PMI has gotten more nuanced for some borrowers.

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I’ll help you review your equity position, payment history, loan program, and all available options to eliminate PMI as quickly as possible.

This content is for educational purposes only and does not constitute a commitment to lend. PMI removal requirements vary by lender and loan program. Tax deductibility information is general in nature — consult a qualified tax professional regarding your individual situation. All loans are subject to underwriting and eligibility requirements. Wayne Wallace, NMLS #745186 • Homewood Mortgage, LLC • NMLS #294974 • Licensed in Texas.