Private Mortgage Insurance (PMI) FAQ
We determine eligibility for private mortgage insurance or PMI cancellation based on the date that your loan schedule shows it will reach 80% LTV. If your loan is current, the loan will be reviewed the date your loan is scheduled to reach 80% LTV, based on original loan terms for eligibility to cancel PMI.
There are some exceptions. Some states provide additional guidelines. Also, certain loan types stipulate an automatic termination date for the first of the month following the midpoint of your loan, or none at all.
To learn more about PMI and PMI cancellation, visit the Understanding Private Mortgage Insurance or PMI page.
Private mortgage insurance (PMI) is an insurance policy. The borrower pays PMI when the loan-to-value (LTV) percentage of their property is 80% or higher. This coverage protects the lender or servicer from financial loss in case of default.
An amortization schedule is a timetable for payment of a mortgage. It shows the amount of each payment applied to interest and principal, and the remaining balance based on the loan terms.
Seasoning is a mortgage industry term that describes loans that have been in good standing for a reasonable amount of time, usually 2 years. If Fannie Mae or Freddie Mac owns your mortgage, seasoning requirements most likely apply to you.
In general, you may not be able to cancel private mortgage insurance (PMI) if your mortgage seasoning is less than two years unless other requirements are satisfied. However, your lender or servicer may waive seasoning or other requirements in some situations.
- Lower LTV: For mortgages seasoned between 2-5 years, the required loan-to-value or LTV ratio must reach 80% or less.
- Property Improvements: Substantial improvements to the property have increased the market value.
- Code Compliance: Improvements must conform to local zoning and building codes.
MIP or Mortgage Insurance Premium is part of the FHA mortgage insurance program only. FHA self-insures their loans using these funds. FHA borrowers can choose to pay an upfront premium (usually financed) or an annual premium paid in monthly installments.
MIP cancellation rules may have changed recently. Please check the Single Family Upfront Mortgage Insurance Premium (MIP) page on the FHA website for the latest information. As of January, 2015:
- 30-year FHA mortgages predating June 3, 2013: In general, MIPs will automatically terminate for these loans if they meet two conditions. The loan must have reached 78% LTV and the MIP needs to have been paid for at least 60 months.
- 15-year FHA mortgages that predating June 3, 2013: MIP automatically drops from these loans once they reach 78% LTV. For loans with FHA case numbers assigned on or after June 3, 2013—and with greater than 90% LTV at origination—MIP will remain in effect. For any loans under 90% LTV at origination, MIP is required for 11 years.
- Mortgages with an FHA case number assignment date on or after June 3, 2013: FHA insurance can be terminated by the servicer or holder if the mortgage is paid in full before the maturity date.
To learn about different kinds of FHA loans, visit the FHA loans website.