The short version
If you have a conventional loan, your PMI is cancellable. You can request it at 80% loan-to-value, and your servicer has to drop it automatically at 78% based on your original purchase price. That's the law, not a favor.
If you have an FHA loan taken out after June 2013 with less than 10% down, your mortgage insurance is there for the life of the loan. No amount of equity removes it. The only exit is refinancing into a conventional loan — which, for a lot of Sonoma County homeowners who bought in 2019 through 2022, is a conversation worth having right now.
And if you have a VA loan, you don't pay monthly mortgage insurance at all. You paid a one-time funding fee at closing instead. Nothing to cancel.
What is PMI actually paying for?
It protects the lender, not you. That's the part that irritates people once they understand it, and I'd rather you hear it straight. When you put less than 20% down on a conventional loan, the lender takes on more risk, so a private mortgage insurance company backstops part of that loss. You pay the premium. They get the coverage.
It's still usually the right trade. Waiting to save a full 20% in this county means waiting years while prices move — I've watched buyers try to out-save a market and lose ground doing it. Paying a couple hundred a month for a while to own the asset sooner is normally the better deal. But it's a temporary cost by design, and too many homeowners treat it as permanent because nobody ever explained the off-ramp.
Cost runs roughly 0.3% to 1.5% of the loan amount per year depending on your credit score and down payment — approximate, and it varies by insurer, so check your own statement. On a $600,000 loan at the middle of that range, you're looking at something in the neighborhood of $250 a month. Ten years of that is real money.
How do I cancel PMI on a conventional loan?
There are three separate paths, and they have different rules. Most people only know about the slow one.
The first is automatic termination. Under the federal Homeowners Protection Act, your servicer must cancel PMI on its own once your balance reaches 78% of the original value — the purchase price or original appraised value, whichever was lower — assuming you're current on payments. You don't have to do anything. You also don't get to use today's higher value; this one is locked to the original number.
The second is borrower-requested cancellation at 80%. Same original-value basis, but you can ask as soon as the amortization schedule gets you there, or sooner if you've made extra principal payments. Put the request in writing. Your loan has to be current with a clean recent payment history, and the servicer may require an appraisal or a broker price opinion to confirm the property hasn't lost value.
The third is the one that matters most around here: cancellation based on current market value. If your home has appreciated, or you finished a real renovation, you can ask to have PMI removed based on what the property is worth now instead of what you paid. Investor guidelines typically impose a seasoning requirement — commonly around two years at 75% LTV or five years at 80% LTV, and the thresholds tighten if the equity came from appreciation rather than improvements. Those rules do change, so confirm with your servicer before you order anything.
- Call your servicer first and ask two questions: what LTV do you require, and do you accept a BPO or require a full appraisal?
- Expect to pay for the valuation yourself. A full appraisal in Sonoma County generally runs several hundred dollars — cheap next to a year of premiums.
- Extra principal payments accelerate every one of these. Even one additional payment a year moves the date meaningfully.
- Get the cancellation confirmation in writing and check the following month's statement. I've seen the escrow analysis lag and the payment not drop.
Why can't I cancel FHA mortgage insurance?
Because it isn't PMI. FHA charges its own mortgage insurance premium — MIP — and it runs on government rules, not the Homeowners Protection Act. Two pieces: an upfront premium of about 1.75% of the loan amount rolled into your balance at closing, and an annual premium collected monthly.
Here's the rule that catches people. For FHA loans endorsed on or after June 3, 2013, if you put less than 10% down, the annual MIP stays for the entire loan term. Not until 20% equity. Not until 22%. The whole term. If you put 10% or more down, it drops off after 11 years. Most FHA buyers came in at 3.5% down, which means most FHA borrowers are in the life-of-loan bucket.
You can hit 40% equity, pay the thing down to half, and FHA will still collect that premium every month. A streamline refinance doesn't fix it either — you stay in FHA, so you stay in MIP. The only real exit is refinancing out of FHA into a conventional loan.
I want to be fair to FHA here, because I write a lot of these loans and they do their job. FHA gets people into houses that conventional underwriting would have turned away — lower credit scores, thinner reserves, higher debt ratios. The permanent MIP is the price of that access. The mistake isn't using FHA to buy. The mistake is staying in it for fifteen years after your credit and your equity have both improved enough that you don't need it anymore.
When does refinancing out of FHA actually make sense?
The math has to clear three hurdles at once: enough equity, a credit score that prices well, and a new rate that doesn't undo the savings.
Equity first. Conventional will drop PMI at 20%, so if you're at or above that on today's value, refinancing gets you out of MIP entirely with no new mortgage insurance at all. Somebody who bought in Santa Rosa or Windsor in 2020 with 3.5% down has been paying principal for six years in a market that moved — a lot of those files are sitting well past 20% and the owner has no idea.
Then the rate. This is where I tell people the truth even when it costs me the loan: if your FHA note rate is a full point or more below what conventional prices today, killing the MIP may not be worth the higher rate. Run both payments — total payment, not just principal and interest — and compare. Sometimes the answer is wait. That's a legitimate answer.
Between those two extremes there's a middle case people miss. If you're above 20% equity but your current rate is competitive, you might still come out ahead, because you're removing the entire MIP line without adding PMI. And if your credit score climbed 60 points since you bought — which is common after a few years of on-time mortgage payments — conventional may price better for you now than it would have at closing.
One caution: don't roll a bunch of closing costs into a refinance to save $180 a month and then sell in fourteen months. Break-even matters. Divide your total cost to refinance by your monthly savings and be honest about how long you're staying.
What about lender-paid MI and single-premium MI?
Lender-paid mortgage insurance — LPMI — is the one that surprises people. There's no monthly MI line on your statement, so you assume you don't have any. You do. It got built into your interest rate, permanently, and it cannot be cancelled at any equity level. The only way out is a refinance.
That's the trade LPMI makes: a slightly higher rate forever in exchange for a lower payment today. It can genuinely be the better structure for someone who plans to refinance or move within a few years. It's a bad structure for someone who then keeps the loan for twenty years. If you took an LPMI loan and you've built equity, get it repriced.
Single-premium MI is a third option — you pay the whole insurance cost up front at closing, often with a seller credit covering it, and there's no monthly premium after that. Nothing to cancel later, but nothing to refund either if you sell in two years. Pull out your closing disclosure and see which of these three you actually have. Half the homeowners who call me about this don't know.
Where do I start?
Find your loan type. Conventional, FHA, VA, or something else — it's on your note and your monthly statement. Then find the mortgage insurance line and what you're paying for it annually.
If it's conventional, run your current balance against your original purchase price. Past 80%? Call the servicer today and request cancellation in writing. Not there on the original number but the house has clearly appreciated? Ask about value-based cancellation and what they'll require.
If it's FHA with less than 10% down, cancellation isn't on the table and there's no point chasing it. The question is whether a conventional refinance pencils out, and that's a fifteen-minute conversation with real numbers, not a guess.
I'll run it for free and tell you if the answer is no. Plenty of times it is. But when someone's been paying $290 a month in MIP on a house that's appreciated 30% since they bought it, finding that out is worth the phone call.