How To Get Rid Of PMI (Private Mortgage Insurance)

If you’re a homeowner, you’ve probably heard of PMI—Private Mortgage Insurance. While it’s a common part of many home loans, it’s also one of the first things many borrowers want to eliminate as soon as possible. At ALCOVA Mortgage, we believe in empowering homeowners with smart strategies to maximize savings. If you’re ready to ditch your PMI, keep reading to learn how.

What Is PMI?

Private Mortgage Insurance (PMI) is a type of insurance that protects your lender in case you stop making payments on your conventional loan. It typically applies when your down payment is less than 20% of the home’s value. While it helps make homeownership more accessible, PMI can cost you hundreds of dollars per year—without offering you any personal financial benefit.

Why Homeowners Want To Eliminate PMI

PMI doesn’t help you build equity or reduce your loan balance. It’s simply an added monthly cost. Removing PMI can free up extra cash each month, reduce your debt-to-income ratio, and boost your overall financial health.

4 Smart Ways To Get Rid Of PMI

Here’s how you can remove PMI and keep more of your money.

1. Reach 20% Equity And Request PMI Cancellation

The most straightforward path is reaching 20% equity in your home based on the original purchase price or current appraised value, then formally requesting that your lender cancel PMI. Here’s what to do:

Review your loan balance to determine if you’ve hit 80% loan-to-value (LTV).
Contact your loan servicer to initiate the cancellation process.
Be prepared to pay for a new appraisal to confirm your home’s value.

💡 Tip from ALCOVA: Home improvements that boost your home’s value can help you get there faster.

2. Automatic PMI Termination At 78% LTV

If you don’t request cancellation, PMI must automatically terminate when your loan reaches 78% of the original value (not current market value). This is mandated by the Homeowners Protection Act.

You must be current on payments for automatic removal.
This happens without any action from you, typically after several years of on-time payments.

3. Refinance Your Mortgage

If your home has appreciated significantly or interest rates have dropped, refinancing might allow you to:

Lock in a lower rate y
Eliminate PMI if your new loan balance is under 80% of the home’s current appraised value.

🏠 ALCOVA Insight: We’ll help you determine if a refinance makes sense based on your equity and long-term goals.

4. Make Extra Payments Toward Your Principal

Even small additional payments—like $50 to $100 a month—can help you:

Pay off your mortgage faster
Reach the 20% equity threshold sooner
Save big on interest and PMI

Can FHA Borrowers Get Rid Of MIP?

If you have an FHA loan, you’re paying Mortgage Insurance Premium (MIP), which works differently than PMI. Here’s the breakdown:

For loans after June 3, 2013, MIP typically lasts for the life of the loan unless you refinance into a conventional loan.
Refinancing into a conventional loan once you’ve reached 20% equity is often the best route.

🛠️ Want to run the numbers? Contact ALCOVA—we’ll walk you through your options step-by-step.

Final Thoughts: Keep More of Your Money

Eliminating PMI can be a major financial win. Whether you’re making extra payments, refinancing, or tracking your home’s appreciation, ALCOVA Mortgage is here to help you take control of your mortgage—and your money.