Private mortgage insurance typically costs $100–$300 per month on a median-priced home. Over the life of the policy, that adds up to $5,000–$15,000 — money that builds zero equity and provides zero benefit to you as the homeowner. PMI exists solely to protect your lender.
The good news: PMI is temporary. It's designed to drop off once you've built enough equity. The better news: you don't have to wait passively for that to happen. There are several strategies to get rid of it faster.
Under the Homeowners Protection Act (HPA), your lender is required to automatically cancel PMI when your loan balance reaches 78% of the original purchase price — meaning you've hit 22% equity based on the original value. You can also request cancellation earlier, once your balance hits 80% of the original value (20% equity).
There's an important distinction here: "original purchase price" means the price you paid, not the current appraised value. Automatic cancellation is based strictly on your payment schedule. But if your home has appreciated, you can use a reappraisal to accelerate the process — more on that below.
The most straightforward approach: pay down your loan balance faster. Every dollar of extra principal payment moves you closer to the 80% threshold. Even an extra $200–$300 per month can shave 1–2 years off your PMI timeline.
When you make extra payments, specify that they should be applied to principal, not future payments. Most lenders have a way to designate this online or by phone. Then track your balance — once it hits 80% of your original purchase price, submit a written request for PMI removal.
If your home has increased in value since you bought it — through market appreciation, renovations, or both — you may be able to get PMI removed based on a new appraisal showing you have 20% equity at current value.
The rules vary by lender, but generally:
Contact your lender first to ask about their specific reappraisal policy before paying for an appraisal. Some lenders use a broker price opinion (BPO) instead, which is cheaper.
If your home value has increased significantly or rates have dropped since you bought, refinancing into a new loan with at least 20% equity eliminates PMI entirely. You get a new loan with no PMI requirement from day one.
This makes sense when the combined savings from dropping PMI and getting a lower rate outweigh refinancing costs (typically $3,000–$6,000). Run the math carefully — a refinance that saves you $200/month in PMI but costs $5,000 in closing costs takes about 25 months to break even.
If you come into extra money — a bonus, inheritance, or tax refund — applying it as a lump sum toward principal can push you past the 80% threshold in one move. This is the fastest path if you have the cash available.
For example, if your remaining balance is $285,000 and your original purchase price was $350,000, you need to get your balance to $280,000 (80% of $350,000). A single $5,000 principal payment gets you there, and your PMI of $150/month stops — saving you $1,800 per year going forward.
If none of the above strategies work for your situation, PMI will eventually drop off on its own. By law, your lender must cancel it at 78% loan-to-original-value. But don't assume they'll do it correctly — servicers make mistakes.
Track your amortization schedule and know exactly which payment should trigger the 78% threshold. If PMI charges continue past that point, contact your servicer immediately with documentation. You're entitled to a refund of any PMI charged after the cancellation date.
Our Rent vs. Buy calculator includes PMI in the analysis when your down payment is below 20%. Adjust the PMI rate slider to see exactly how much it adds to your monthly cost and when it drops off.
Calculate with PMI →On a $350,000 home with 10% down and a 0.55% PMI rate, your monthly PMI is about $145. If PMI would normally last 7 years (until you reach 22% equity through regular payments), that's roughly $12,180 in total PMI costs.
If extra payments or a reappraisal lets you drop PMI after 3 years instead of 7, you save about $6,960. That's real money — enough to offset most of the effort involved.
There are situations where aggressively paying down your mortgage to remove PMI isn't the best use of your money:
PMI removal should be a priority, but not the top priority if you have higher-return options available.
PMI is a temporary cost that most homeowners pay for 3–7 years. You can shorten that window through extra payments, reappraisal, refinancing, or a lump-sum paydown. The strategy that makes the most sense depends on your home's appreciation, your available cash, and current interest rates. Run the numbers for your specific situation before deciding which path to take.