Private Mortgage Insurance 101

I’m sure most prospective homeowners like the idea of putting little to nothing down when purchasing a property, but doing so isn’t without its drawbacks.

In fact, it can cost you quite a bit of money if you don’t come to the closing table with a sizable down payment.  Aside from having a larger mortgage payment, you might also be hit with an extra form of insurance.

When is mortgage insurance required?

Borrowers who take out conventional loans (those not guaranteed by the government) and are unable to come up with a 20% down payment, or simply don’t want to, must pay “private mortgage insurance,” also known as PMI, to obtain a mortgage.

It is required by the bank or lender providing financing if the loan-to-value, or LTV, is greater than 80%. So those who fail to come up with a 20% down payment are stuck paying PMI.

Like other forms of insurance, you pay a premium for PMI coverage, which is often bundled into your mortgage payment (this is in addition to homeowners insurance).

For the record, some lenders may tell you that mortgage insurance isn’t required even if your LTV is above 80%, but it’s likely just factored into the (higher) interest rate. So you still pay it, just not directly.

What is private mortgage insurance for?

In short, it’s all about risk and protection.  A mortgage with no down payment is more likely to default than one with a large down payment.  And even if a borrower with a huge down payment misses their payments, the lender can still sell the home for a profit if it falls into foreclosure.

If it’s a no-down payment loan and home prices take a dive, it could turn into an underwater mortgage, which would equate to a loss for the lender when they attempt to offload it.

So PMI is important because it protects the originating bank or lender when a borrower with a very high LTV defaults on their mortgage. That’s right, PMI is insurance for the bank, not for you.

If you default on a loan with PMI in-force, the lender will receive a payout from the private mortgage insurance company to cover the associated losses.

It is also said to benefit borrowers by allowing them to finance a property with very little down in one single loan, which I suppose is true, but it does come at a cost.

For example, homeowners can obtain 95% LTV financing or higher if they agree to pay private mortgage insurance, without requiring a large down payment.

How much does private mortgage insurance cost?

The cost of private mortgage insurance can vary greatly and carries its own pricing adjustments, just as the associated loan will.

In other words, your LTV, credit score, the size of the loan, the amount of coverage, transaction type (refinance vs purchase), loan type and premium type can all come into play.

The greater the combined risk factors, the higher the cost of PMI, similar to how a mortgage rate rises as the associated loan becomes more high-risk.

So if the home is an investment property with a low FICO score, the cost will be higher than a primary residence with an excellent credit score.

Per the Insurance Information Institute (III), mortgage insurance premiums can range from $250 to $1,200 per year, though it’s not uncommon to pay several hundred a month for coverage if you’ve got a large loan amount and very little down payment.

Let’s look at a quick example:

$200,000 purchase price
$190,000 loan amount
95% LTV
0.70% of loan amount for annual mortgage insurance premium (paid monthly)

In the scenario above, you’d be looking at a cost of $110.83 per month for coverage.

If the mortgage is above 95% LTV, the annual mortgage insurance premium might increase to something like 0.90%. In general, a higher LTV equates to higher risk and premium.

Keep in mind that PMI can also be paid upfront or by the lender instead, with the latter resulting in a higher mortgage rate as a result.

The Homeowners Protection Act of 1998 (How to Get Rid of Mortgage Insurance)

I’m assuming the most popular question with regard to private mortgage insurance is how to cancel it?  Fortunately, there are many ways it can be canceled.

In the past, homeowners continued to pay PMI even after their LTV fell below 80% because the banks and mortgage lenders were not required to notify borrowers. It used to be the responsibility of the borrower to cancel PMI once they reached the 80% LTV mark, but recent laws have forced the banks and lenders to take responsibility as well.

Automatic Termination of PMI

All the confusion led to the Homeowners Protection Act of 1998, which established rules regarding termination of private mortgage insurance on principal residences.

The law requires home mortgages signed on or after July 29, 1999 to automatically terminate PMI once the homeowner reaches 78% LTV, or gains 22% equity in their home, based on the original property value (lesser of purchase price/appraised value).

Just note that you must be current on your mortgage when you hit 78% LTV to get PMI removed. If you aren’t, it will be automatically terminated on the first day of the first month following the date that you become current.

Borrower Requested Termination of PMI

The law also allows homeowners to request the termination of PMI once they gain 20% home equity, or 80% LTV of the original value. So at that time you can contact your lender and ask for the PMI payments to cease.  But they won’t contact you, so you’ve got to keep an eye on your loan amortization schedule to figure out when you’ll hit that key level.

If you happen to make extra mortgage payments and/or your property has increased in value (or if you made documented improvements to your property), you might be able to submit a request for cancellation even faster.  But you may have to pay for an appraisal, so bear that in mind.

And you must have a good payment history (no 30-day late payments in the past year or 60-day late payments in the past two years), be current on your loan, and submit a written cancellation request.

Final Termination of PMI

The Homeowners Protection Act has one final option to remove PMI. If for some reason PMI was not canceled by request or automatic termination, the loan servicer must cancel mortgage insurance by the first day of the month immediately following the midpoint of the loan’s amortization period.

Again, the borrower must be current on their mortgage on this date for this rule to go into effect.

Mortgage servicing companies must provide a telephone number for all their mortgagors to call for information about termination and cancellation of PMI. And new borrowers covered by the law must be told – at closing and once a year – about private mortgage insurance termination and cancellation.

The Homeowners Protection Act of 1998 does come with some exceptions though. If your loan is considered “high risk”, if your property has additional liens, or if you were not current on your mortgage within the year prior to termination or cancellation, you could be stuck with PMI until those issued are resolved.

Additionally, it does not cover FHA loans or VA loans, or loans with lender-paid MI.

Though the law does not cover loans that were signed before July 29, 1999, or loans with lender-paid MI, lenders or mortgage servicers must tell borrowers about the termination or cancellation rights they may otherwise have with such loans (including rights established by the contract or state law).

If you signed loan documents before July 29, 1999 you will have to manually terminate your private mortgage insurance once you reach 20% equity in your home, or 80% LTV or less. Be careful to pay special attention to this as the lender or bank is not required to notify you, and you will continue paying PMI if you fail to act.

There are many other specific statewide rules and rules for Fannie Mae and Freddie Mac loans, so always do your own due diligence, and contact your bank or lender to get all the facts for your specific loan in your particular state.

How can I avoid mortgage insurance altogether?

You can avoid paying private mortgage insurance altogether while putting no money down by utilizing a combo loan.

If you keep your first loan at 80% LTV or less, and add a second loan of 20% or less, you can still obtain 100% financing without paying PMI. Along with that, you’ll likely snag a lower blended mortgage rate by splitting the loan up. Learn more about mortgage combos and blended rates.

Or you can look into the Bank of America No Fee Mortgage, a so-called no cost loan that doesn’t require mortgage insurance, presumably even if the loan exceeds 80% loan-to-value.  The TD Right Step mortgage also allows a three percent down payment with no mortgage insurance required.  However, these programs typically have the mortgage insurance built into the interest rate, so it’s not really free.

Most homeowners these day opt for a second mortgage instead of doing one loan to avoid high interest rates and private mortgage insurance. The only real downside is the associated fees with a second mortgage, and the two separate payments.

Either way, you should always explore the possibility of two loans to determine which will be a cheaper alternative.

Tip: If you do happen to have a loan with mortgage insurance, you can always refinance out of it and drop the mortgage insurance if the new loan has an LTV of 80% or less.  It’s not advisable to refinance just to get rid of mortgage insurance, but if you can snag a lower rate in the process, it could be a smart move.


  1. bob March 5, 2015 at 2:59 pm -

    Wow.. My husband and I just put 5% down. We both have FICOs over 800. Our yearly PMI will be $1246 through Essent. I didn’t realize we were so far outside the normal range. Radian wants to charge us even more… $1460 per year!

  2. Colin Robertson March 5, 2015 at 5:09 pm -

    This is why folks like to put down 20% or more.

  3. Claire April 9, 2015 at 2:03 pm -

    What do you mean when you say that borrowers have a right to “request” termination? The right to make a request (on its own) is a pretty flimsy right. My question is: are there any circumstances (e.g., being up-to-date on payments, good credit, good appraisal, etc.) under which a lender is REQUIRED to comply with such a request?

    I don’t want to put in extra equity, pay for an appraisal (which I am sure will come back fine if it is objective), and then have the lender tell me, “we decided not to cancel it; you can wait 3 more years until you automatically hit 78%.” And, as far as I can tell, this is exactly what the lender has motivation to say if it is legal. I am buying them insurance, so of course they will force me to continue buying that gift for them as long as they legally can.

  4. Colin Robertson April 9, 2015 at 3:49 pm -


    The actual verbiage used in the The Homeowners Protection Act of 1998 is “Borrower Requested Cancellation.”

    You can read it here:

  5. Wendy April 20, 2015 at 3:44 am -

    Curious, if you had PMI and a short sale, since the lender was paid in full from the PMI company how can they legally list a negative credit report in regards to your account when your PMI was in place for such an event?

  6. Colin Robertson April 20, 2015 at 4:14 pm -


    Just because the PMI company covers the lender’s loss doesn’t mean future creditors shouldn’t know about your short sale when potentially extending you credit.

  7. mark April 23, 2015 at 7:24 am -

    Per your article: “If you happen to make extra mortgage payments and/or your property has increased in value (or if you made documented improvements to your property), you might be able to submit a request for cancellation even faster.”

    My loan originated in Oct 2012 near the bottom of the market here, with 95% LTV @ $315K purchase price (appraisal and Zillow were within 1%). I’ve paid ~$250-$300 extra every month since Day 1. Current LTV is now down to 87.5%, based on original purchase price. House values in my area have gone up quite a bit in the past 2.5 years, and Zillow currently shows my house at $370K+ value.

    What chance do I have to drop PMI ($147/mo) based solely on a new appraisal, which would have to come in around $344K to meet a “new” 80% LTV? I’ve made improvements to the house, mostly on my own (energy improvements, extended gas to back deck, small bathroom remodel, new paint, light fixtures, dedicated media room) but nothing that’s necessarily “documented” such as using an outside contractor for a major remodel project.

    Part of me thinks the bank will just do whatever works in its favor, and refuse to acknowledge any house value over the original $315K…

  8. Colin Robertson April 23, 2015 at 10:08 am -


    That’s the risk, and you may be on the hook for the appraisal cost for taking that chance. Alternatively, one could refinance if rates are more favorable today than they were back then and ideally do so at a LTV of 80% or less based on the increased property value. But again that’s contingent on the value actually being there. However, that could lower the monthly payment even more via a lower rate and no PMI.

  9. Sarah April 27, 2015 at 12:46 pm -

    Hi Colin,
    We purchased our house with an FHA First Time Homebuyers loan originally in 2009 at the bottom of the market. We were fully aware that we would have to pay PMI on the loan for 5 years (at that time they said OR until 80% LTV). In 2012 we refinanced the loan to a conventional loan with a better interest rate and we have now (almost 6 years later) reached 79% LTV. We have been back and forth with the mortgage company about requesting that PMI be removed and have been told a variety of things by probably everyone who works there – but this is the final gist:
    1. We were told that even though we now have a conventional loan, our PMI started over and we still have to pay it for 2 more years regardless of the fact that we are under 80% (Which was never once disclosed to us when we refinanced or I wouldn’t have done it)
    2. Then we were told that as long as we are 75% LTV – it will automatically come off without an appraisal

    We have a an EXCELLENT payment history with no late payments, and very good credit – about 815.

    Can you tell me what the truth is? I feel like everyone I talk says something different so I can’t trust anything.

    Oh and one other thing – since we refinanced to a Conventional Loan from an FHA – does the Homeowners Protection Act of 1998 now apply? I know you mentioned that it doesn’t apply to FHA, VA, etc…

  10. Colin Robertson April 29, 2015 at 9:58 am -


    Check out that link I posted that covers The Homeowners Protection Act of 1998. PMI should be automatically terminated once the loan balance is scheduled to reach 78% of the original value of the property, defined as the lesser of the purchase price or appraised value at time of loan consummation. Not sure where they’re coming up with 75%. At 80% LTV you can request that it be removed by writing to your loan servicer, and borrowers can always apply to refinance to remove PMI if the new appraised value puts the LTV at 80% or lower.

  11. Marla Wentz May 4, 2015 at 1:03 pm -

    If I have a pmi now and refi and my pmi is suppose to come off in 16 months will the new bank acknowledge that.

  12. Colin Robertson May 4, 2015 at 3:33 pm -


    Ideally your new lender is refinancing you at 80% LTV or less (on a conventional loan) so no PMI is even necessary on the new loan. You should discuss with them to make sure.

  13. Melinda May 5, 2015 at 7:35 pm -

    I just wrote a long comment but I don’t think it went through, so this is the short version. My bank did not automatically cancel my PMI at 78%. I called to have it cancelled and asked for a refund since it was then at 75.9%. I am getting the run around about a refund. Is the bank legally obligated to refund the amount I paid after 78%?

  14. Colin Robertson May 6, 2015 at 9:59 am -


    Check out the link I posted several comments up from this one from the Federal Reserve. It details what the lender/servicer must do if the borrower paid premiums after the date PMI premiums should have ceased.

  15. Melinda May 6, 2015 at 7:34 pm -

    I read through the act. Do you know who I would contact for questions regarding my issue/ does the agency that enforces this act have a phone number I can call/ what is the agency name? thank you

  16. P Kempf May 9, 2015 at 7:29 am -

    Original value” is defined as the lesser of the sales price of the secured property as reflected in the purchase contract or, the appraised value at the time of loan consummation. In the case of a refinancing, the term means the appraised value relied upon by the lender to approve the refinance transaction. My purchase price was 269K in 2008. Refinanced in 2012 at 249K and the appraisal came in at 175K, there were flaws in appraisal. I did not refinance to get rid of PMI but rather to reduce interest rate by 3 points. PMI remained in force. Now in 2015 its even more difficult to eliminate PMI because of the extremely low appraisal. There should have been a Truth in Lending for PMI at that time. Now I’m stuck paying PMI even with an excellent credit rating. The effect on PMI is obscure when refinancing. Refinancing may reduce the PMI payment but the overall amount required to eliminate PMI is increased. In 2015, I’m able to pay the 20-22% down on the original 269K purchase price, but the refinance ruined the chances of any quick elimination of PMI. I’m steamed.

  17. Michael June 2, 2015 at 7:28 pm -

    We purchased our home in August of 2014. Our PMI payment is around $87month. Recently we received an Escrow Summary showing that we paid double for March 2015 (yes I should have caught this in April not June) The statement also says we have a escrow shortfall of exactly 1 PMI payment. I called the bank and was told that it was due to the type of PMI policy we have, during the first year we will have to make 1 double payment. Not liking that answer I read over everything we signed at closing. Nowhere does it show anything about a double payment in the first year of PMI. Our loan officer was caught off guard by my question as well and said she would get back to me. If I don’t pay them their $87 for the shortfall by 6/16 they will increase my payment to cover it. I believe they are wrong and trying to cover their tracks. Do I have any recourse?

  18. Colin Robertson June 3, 2015 at 3:57 pm -


    Might be because the mortgage in paid in arrears and you skipped a payment early on? You could also try contacting the PMI company.

  19. Brian June 9, 2015 at 5:35 am -

    I read through Part B of the Act for automatic termination of the insurance once you hit 78%. I requested to cancel my PMI early because I had additional money added to my monthly payment. I just received the letter stating the requirements to cancel the PMI. First I need to have the loan for 5 years. Second, is that I need to have 22% paid. Third, good payments. Fourth, a written letter for removal. My issue is that I have only had the loan for 2 years and not 5 years. Back to the Automatic Termination..

    It states “The principal balance of the mortgage is first scheduled to reach 78 percent of the original value….” Does this mean that the 5 year of my loan is the time where it is scheduled to reach 78 percent? Will my PMI be automatically terminated if I’ve put extra money towards my monthly payment?

  20. Colin Robertson June 9, 2015 at 11:30 am -


    The word “scheduled” refers to it reaching that 78% point based on making the original payments, not with extra payments.

  21. Nicole Parker June 12, 2015 at 5:30 am -

    I would just like to say how this article has really put things into perspective for me and I really appreciate it. I am a first time home owner, I bought my house last April and have had a heck for a time with the bank in regards to my PMI Premium.
    I have a great credit score, put 4% down, have a -what I thought to be-low risk loan, and I have a premium of $1,486.44 for my PMI.

    I need to educate myself more on “loan splitting” because I would really like to get away from paying PMI at all.

    Thank you again for all your knowledge Colin.

    Nicole Parker

  22. Colin Robertson June 12, 2015 at 4:58 pm -

    No problem Nicole, keep reading and empower yourself!

  23. Rod June 18, 2015 at 11:16 am -

    I think I’m more confused. Is the bank required to automatically terminate the PMI or not once the 78% mark is reached.
    Secondly, is it legal for the bank to require me to get an appraisal and do it through their chosen appraiser.

  24. Colin Robertson June 18, 2015 at 10:27 pm -


    Per The Homeowners Protection Act of 1998, it should be automatically terminated when the loan is originally scheduled to reach 78% based on the original amortization schedule (not any extra payments you may have made). If you ask for it to be removed sooner, an appraisal is required to determine the current value is sufficient. Where that appraisal comes from is probably determined by your bank or servicer, but the appraiser should remain unbiased and most likely you’d want to use an appraiser they’ll actually recognize as opposed to paying for something that may not be usable.

  25. Sharon June 22, 2015 at 11:05 am -

    I am SO confused.
    1. How do you know what is going towards PMI? I don’t have anything that shows it.
    2. I have made on time payments for 2 years now (paid $25 extra each month and paid before the 1st. A big chunk was “forgiven” with the government Principal Forgiveness Act, so I am now at 60% owing on the house versus the value. I asked bank to remove the PMI and am waiting on a response. Some reps said it was removed, others said it wasn’t and another said I have to go through a process. What’s my chances on having it removed?

    FYI–due to a divorce and ex not following court order, payments were WAY behind but I busted my butt for 2 years and worked out a plan with bank to fix it. I’m in good standing now for 23 months.

  26. Colin Robertson June 22, 2015 at 11:12 am -


    It would help to know how you paid/pay your PMI first…was it built into the rate (lender paid) or deducted from your total payment each month? Break down what you pay each month (by principal/interest, taxes, insurance, etc.) to determine if you’re still paying it. Your loan servicer should be able to help you with this.

  27. AT June 23, 2015 at 10:38 am -


    Even though I have paid down to 20% of original home value now (paid 10% down), for the home bought in March 2015, Bank of America is declining to cancel PMI as loan has not completed 2 years. Loan officer VERY clearly told several times that I can make extra payments and can get rid of PMI as soon as I pay 20% or more. Does the law applies to them regardless?

  28. Colin Robertson June 23, 2015 at 11:30 am -


    They’re probably referring to investor or Fannie Mae/Freddie Mac rules regarding seasoning of the loan if basing the LTV on the current property value. You’ve apparently paid the loan down to 80% of the original value which may not require a two-year wait but still an appraisal to determine the original value hasn’t dropped since origination.

  29. Nick June 25, 2015 at 3:30 pm -


    I just purchased a house with 5% down as I had not sold my original house in time to buy the new house, so I have PMI in tune of $300/mth. I sold my other house a week after buying the new house and now have the additional 15% to put down on the principal which would ideally bring the LTV to 80%. Could I pay the principal down and get PMI removed before my first loan payment or do I have to wait a certain period of time before I could request a cancellation and be successful?


  30. Pam June 26, 2015 at 6:01 am -

    We are paying PMI insurance and my question is, if I go into default and the insurance covers the bank, what repercussions are against me other than a bad credit rating? Do I owe money out of pocket for anything?

  31. Colin Robertson June 29, 2015 at 8:49 am -


    I suppose it would depend on state law regarding recourse and whether the PMI company decides to seek a claim for any losses.

  32. Colin Robertson June 29, 2015 at 9:11 am -


    Generally PMI must be paid for X amount of years but check your paperwork and/or contact your servicer. If it’s 80% LTV based on the original purchase price you may be able to get it removed, though you’d probably need a new appraisal ordered to ensure no value drop. If that doesn’t work you could potentially refinance out of the loan and into a new loan at 80% LTV if it makes sense.

  33. Chad June 30, 2015 at 9:04 pm -

    Can you tell me if the PMI scam is limited to only one PM Insurer? I can’t seem to find any competition out there, it sure would be nice to “cost compare”.

  34. Colin Robertson July 1, 2015 at 2:01 pm -


    There are a few big PMI companies out there…MGIC, Radian, Genworth, Triad, etc. Can’t speak for their pricing or business practices.

  35. Estela July 9, 2015 at 7:21 pm -

    If I bought a house in 2012 with PMI, is it possible to sell the house and purchase another one? We are trying to move out of state but seem to be confused on what we can and cannot do while having PMI

  36. Colin Robertson July 10, 2015 at 11:37 am -


    PMI is just attached to the loan…once you sell, the loan is paid off.

  37. kerri July 10, 2015 at 2:32 pm -

    We are just about to buy our house, which is appraised much higher than we are purchasing it for. With what we are putting down, the pmi should be reached. However, we were told my mortgage lender that because of my husbands previous foreclosure (which he paid off in full, early), that we would have to pay the pmi for 11 years. Could you give me a reference place for this? Thank you.

  38. Colin Robertson July 15, 2015 at 12:10 pm -


    I’m assuming they’re putting you in a FHA loan (because of the past foreclosure) as opposed to a conventional loan, which requires a minimum of 11 years of mortgage insurance.

  39. Matt July 17, 2015 at 1:17 pm -

    I purchased a home in late 2012 with about 10% down. I’ve been paying about $110/month in PMI, but I’m fortunate to have bought a home that I’m quite confident has gone up in value. I base this opinion on recent sales in my neighborhood. I’m confident that I’m now below 80% LTV and I inquired with my servicer to see what the removal process would be. They informed me that I would have to pay for the appraisal and it would have to show my LTV below 75% which I was surprised to hear. I’m confident I’m below 80% but not as confident I”m below 75%. The bank is insisting this is not their policy and they are simply enforcing Freddie Mac’s policy. Is 75% the true threshold for cancellation based on current appraised value?

    (no late payments, loan is older than 2 years, servicer is NYCB).

  40. Susan July 20, 2015 at 1:18 pm -

    I bought my home in August 2011. I paid in advance close to $1800.00 to my pmi insurance and I am not even sure why I had to do that. I am paying $100.00 per month on my pmi. My home has increased in value and is valued at $140,000 range. I owe $96,000, but I can not get out from underneath the pmi insurance because they are going by the value at time of sale, which was $110,000. My question is, what was the $1800.00 for? And is there anyway to get out from under the pmi without re financing? My interest rate is 3.25%, so I have a great rate.

  41. Colin Robertson July 20, 2015 at 3:12 pm -


    Maybe a split between upfront MI and monthly MI to make the monthly MI amount lower. As for getting rid of it, new appraised value might work though there may also be a minimum time period for Fannie/Freddie.

  42. Colin Robertson July 20, 2015 at 3:24 pm -


    Check that link to Fannie Mae’s guidelines a few comments up from yours…

  43. Jum August 1, 2015 at 10:34 am -

    I refinanced in Dec of 2012 and the appraisal was in my mind on that of other appraisers so I questioned it but even with PMI it dropped my payments and I was told by my lender I could request the PMI be removed after a year. At signing I asked if I would have to carry PMI for a minimum time frame and was told there were no restrictions. After 1 year I attempted to have it removed I was told I had to carry PMI minimum of 2 years? my Loan was sold and now my current lender is holding me to 25% equity to remove? What can I do or how do I validate this as the lender is no help at all

  44. Colin Robertson August 2, 2015 at 12:21 pm -


    Probably a Fannie Mae rule…check that link I posted above for more info. Might be able to get an appraisal and drop PMI faster.

  45. mark August 4, 2015 at 1:15 pm -

    I thought I’d post the following, in case this info might help someone else drop PMI early as I just did…

    My original posting back on April 23, 2015:
    Per your article: “If you happen to make extra mortgage payments and/or your property has increased in value (or if you made documented improvements to your property), you might be able to submit a request for cancellation even faster.”

    My loan originated in Oct 2012 near the bottom of the market here, with 95% LTV @ $315K purchase price (appraisal and Zillow were within 1%). I’ve paid ~$250-$300 extra every month since Day 1. Current LTV is now down to 87.5%, based on original purchase price. House values in my area have gone up quite a bit in the past 2.5 years, and Zillow currently shows my house at $370K+ value.

    What chance do I have to drop PMI ($147/mo) based solely on a new appraisal, which would have to come in around $344K to meet a “new” 80% LTV? I’ve made improvements to the house, mostly on my own (energy improvements, extended gas to back deck, small bathroom remodel, new paint, light fixtures, dedicated media room) but nothing that’s necessarily “documented” such as using an outside contractor for a major remodel project.

    Part of me thinks the bank will just do whatever works in its favor, and refuse to acknowledge any house value over the original $315K…

    Colin Robertson April 23, 2015 at 10:08 am –

    That’s the risk, and you may be on the hook for the appraisal cost for taking that chance. Alternatively, one could refinance if rates are more favorable today than they were back then and ideally do so at a LTV of 80% or less based on the increased property value. But again that’s contingent on the value actually being there. However, that could lower the monthly payment even more via a lower rate and no PMI.

    Aug 2015 update:
    I was able to drop PMI by refinancing my loan from a 30-yr, 3.375% (3.860% APR) to a 15-yr, 3.000% loan (3.011% APR). Since I had been paying ~$300/mo extra already, the new payment was only ~$140/mo more. And I got paid one point to take the 3.000% rate in lieu of a 2.875% rate. My rough calcs show me saving over ~$80K in interest with the ReFi, along with ~fifty less payments (based on my extra principal payments with the previous loan).

    My original mortgage was with a local Seattle-area bank “HSB” in Oct 2012 (not sure if I can use full names here), who sold my loan to “STM” in Oct 2014. In late May 2015 a friend referred me to his local mortgage broker who had competitive rates via “PF”. I also contacted STM about what options they could offer as they had my current loan. STM indicated that I could not drop PMI until 5 years passed from the original Oct 2012 loan origination, AND if the LTV was 75% or less. With a PF ReFi, all I needed was 80% LTV to eliminate PMI. So I went the PF route, the appraisal came in at $360K giving me a 76% LTV on the $274K balance, so PMI was now history…

    My best to those of you that successfully follow in my footsteps!

  46. Suzie August 5, 2015 at 1:48 pm -

    We have a conventional loan & we just paid for an appraisal to drop our pmi. Our bank is telling us we can’t drop until we hit the 80% LTV. We easily hit the 78% LTV. If I read this article correctly, we have a right to drop it at the 78% because of this act, correct?

    I put that wrong, our bank is making us hit 75% LTV not 80%.

  47. mary white August 12, 2015 at 4:02 pm -

    Our loan will have equity of 78% within the first year due to making triple payments. however the lender is telling us we have to pay the pmi for at least two years even if we have the equity. is that true?

  48. Nick A. August 19, 2015 at 3:27 pm -

    We brought our home in 1990 for 60,000.It needed some work is why it was so cheap.After tiling the whole house,fencing around the yard,painting inside and out,new yard and plants,we refinanced in 2002 for 106,000 dollars,our house appraised at 134,000 though.It peaked in Dec.2006 at 178,000.Recently,my wife looked into getting a cheaper interest rate with Quicken loans.She was very specific with him,and told him she didn’t want any insurance,taxes,or any other cost included in the mortgage payment.He sends a sheet on how our numbers worked out,but we need an appraisal to complete the loan,and we needed to pay 500.00 up front for the appraisal.We were told the appraiser would only compare houses to ours that sold within the last 6 months,He uses 5 of 6 homes that sold a year ago,and 2 active homes that foreclosed in 2002 and 2005,and no one has bought them,or fixed them up to live in.He appraised our home at 91,000..We just put a new roof,new 3 ton a/c unit in,tiled the kitchen back-splash,new sink and toilet,and the whole house painted inside and out.We got 75.80 a sq.ft.,which is the less money per sq.ft than all 8 homes he used,4.20 less than the foreclosed home that got 80.21 sq.ft.So Quicken loans start changing our loan from the original agreement,to one where PMI,mortgage insurance,and taxes are now added into our loan,going against what my wife demanded they don’t do,they did it anyway.Our mortgage insurance is already paid until Feb.2016,and we pay our taxes quarterly and our state gives us a discount for paying our taxes that way.So now Quicken loans added more mortgage insurance,and PMI,using the original 60,000 cost.How can you use old dated.We paid-off the 20% required when we first refinanced,paying on our home for 12 years on a 30 year mortgage.Now we’ve paid 13 years on a 30 year mortgage,almost 50% of the refinanced loan,and now Quicken loan wants to use the appraisal to determine what 20% is,that’s paying 20% of a 219,000 dollar loan,up 40,000 from the original deal.No more money down,we just pay for the appraisal,has turned into,”you need to pay us 10,000 at closing.Quicken Loans can kiss my American assets goodbye.

  49. Colin Robertson August 20, 2015 at 1:45 pm -


    Sounds like your appraisal is so low it completely changes the loan. Some people might get a second opinion or try a different lender/appraiser.

  50. mark August 25, 2015 at 9:36 am -

    Suzie/mary white-

    You might try refinancing with another lender to eliminate PMI, assuming your appraisal comes in less than 80% LTV. Read my post directly above yours for how I was able to accomplish this. My previous mortgage holder also told me that they would hold me to 75% LTV as it was the original loan.

    So do what I did – change lenders and (hopefully) eliminate PMI…

  51. Jignasu Desai August 27, 2015 at 10:36 am -


    Thanks for this posts its really informative. But I have a question about how do lenders calculate a P/MI payoff during a refinance. Currently have a $500,000 FHA 5/1 ARM @ 3.625%. My LTV around 2.5% so I’m paying a higher MI rate at 0.9% (~4,500 per year). I’m looking to refinance out of the program into a fixed convention. My lender said they can calculate a Lender/Borrower Paid Payoff for my P/MI. How does one calculate that; because if I take $4,500 (x ~9.5 years [102 month months to LTV 20%]) its a significant amount to pay out. So how does their calculation work ?

  52. Jerry August 29, 2015 at 2:26 pm -

    So My LTV is well below 75% and I have a mortgage through chase that I did a refi on about 2 years ago. I called them and they said I met all the requirements but still had to wait till at least 2017. Is this legal and is there anything else I could do to get rid of PMI? Thanks in advance!

  53. Rodney September 6, 2015 at 5:27 pm -

    I’m looking at buying a home and I can get it for under 80% LTV but only have 5% down payment. My question is, can I get a PMI free loan?

  54. Colin Robertson September 8, 2015 at 8:55 am -


    A little confused, but to avoid PMI generally find a loan that doesn’t charge PMI for 5% down, some lenders do this. Or look at lender-paid PMI, which is higher interest rate in exchange for it being paid, or consider second mortgage to keep LTV at/below 80%.

  55. James September 8, 2015 at 12:04 pm -

    I have a conventional loan from 2007 (right before housing burst) and my property value went from 141,800 original down to 133,000 (per appraisal in Dec. 14).

    I have PMI and am only at 89% LTV currently. I tried refinancing about a year ago but PMI seemed to be the issue. Other lenders I went to (because I want to get away from my current) said they couldn’t proceed with a Refi unless PMI was dropped.

    Can PMI be a reason to prevent being able to refinance with another lender?

  56. Colin Robertson September 8, 2015 at 12:44 pm -


    Might be that the PMI pushes your DTI too high so you can’t afford payments on a refi?

  57. mikeS September 10, 2015 at 4:46 pm -

    We’ve been going back and forth with our lender about removing our PMI. We have been in the home for 8 years and have paid the loan down to $256,000.00. The lender requested we get an appraisal and it came back at $331,000.00. However, they still denied our request because they said in California, it needs to be at 75%. My loan is backed by FannieMae and my understanding was that they had to abide by FannieMae guidelines. Everything I read with FannieMae says all I need is 80%. My lender is Ditech, formerlly Green Tree. Any guideance is greatly appreciated. Thank YOU!

  58. Rodney September 11, 2015 at 10:46 pm -

    Thanks Colin!!

  59. rene berg September 18, 2015 at 5:21 am -

    I short-saled my house 3 years ago and now ready buy another house. I am putting 21% DP, but the mortgage officer said that I still need to get PMI with FHA loan as it’s required with short sale in the my background, and I can’t take conventional loan.

    Can somebody please confirm if this is true, and what could be my option to not get PMI?

    Thanks much for your time.

  60. Colin Robertson September 18, 2015 at 1:36 pm -


    PMI is for conventional loans. FHA loans also have mortgage insurance known as MIP and it is now required for a minimum of 11 years even if you put down 20% or more. To avoid mortgage insurance you’d have to go conventional, but the waiting period for conventional loans is 4 years post short sale unless you can prove extenuating circumstances.

  61. Rene Berg October 2, 2015 at 1:11 pm -

    Thanks Colin! So I guess I just need to wait and pay PMI one more year to get rid of it.

  62. Kathryn October 5, 2015 at 1:39 pm -

    Colin, I purchased my home in 1988 and paid it off this past month (in 27 years instead of 30) . Since I just received a letter from my lender they could not cancel my PMI, I have been looking into this. My question is, should I have still been paying PMI through the final payment? I see info on loans after 1999, but shouldn’t this have been cancelled by the lender before now? Thanks so much for your help!

  63. Colin Robertson October 7, 2015 at 11:28 am -


    I believe it is up to the individual lender if before 1999, unless it was a Fannie/Freddie loan, then it should have been cancelled at the mid-point of the original amortization period.

  64. Chris October 7, 2015 at 5:54 pm -


    I have a question…. My PMI was just recently removed as of my request. However I was eligible to have it removed as of this past February but it was not automatically removed as it should have been according to the Homeowners Protection Act of 1998. Which means I was paying extra all that time for the PMI. Does that mean I should be refunded that extra money I was paying every month since February for the PMI that should have been automatically removed at that time and not now? Thank you.


  65. Sara October 8, 2015 at 3:59 pm -

    I want to make a large extra payment on my mortgage to get the LTV below 80%. I understand I need to make a written request to the bank. So, I called them to find out to whom I should address this written request when I send the extra payment. They claim that no matter how much I pay I cannot get rid of the PMI unless I’ve had the loan for at least 2 years. They are citing the part of the PMI disclosure that says no late payments “during the past 12 months beginning 24 months before.” I take this to mean no late payments during that time period (which I have not had), NOT that I must have had the loan for greater than 24 months! What do you think? I can’t decide if I should get a lawyer or refinance. Both would cost me money and I already have a good rate at 3.875%. So frustrating

  66. Colin Robertson October 8, 2015 at 4:42 pm -


    PMI typically has a seasoning requirement of 2 years for cancellation at 75% LTV or 5 years for cancellation at 80% LTV. Ask your lender/servicer/PMI company for specific guidelines so you know where you stand and when the soonest it is you can request to remove it.

  67. Mary October 10, 2015 at 6:54 am -

    Hi – we refinanced in June – conventional 15 year mortgage. At the closing, we were told the PMI would come off on 11/1/15. I contacted the bank and they said the investor is Freddie Mac and Freddie Mac requires a 78% LTV so the PMI will not come off until 5/1/16.

    Is that correct? I can’t find any information verifying that.

  68. Colin Robertson October 11, 2015 at 11:57 am -


    There’s a difference between removing it at your request and automatic removal. If they didn’t remove PMI when it was supposed to be automatically removed you may be entitled to a refund. A refund may also be due if they collected premiums in advance (unearned premium) for a later payment to the PMI company. Might be best to speak with your servicer directly to determine if a refund is due.

  69. Chris October 13, 2015 at 5:54 pm -

    Thank you Collin I will speak them and see what they say.


  70. Colin Robertson October 15, 2015 at 8:49 am -


    If the new loan was at/below 80% there shouldn’t be PMI. If it wasn’t, maybe the closer was basing it on 80% LTV as opposed to 78% LTV?

  71. Todd October 16, 2015 at 8:14 am -

    I closed on my house on 7-31-14 with Lender “A”. I get a call this week 10-15-15 from new Lender “B” which the loan was sold to after 1 month. “B” tells me that there have been no PMI payments in the first year and my payment will be going up $240. How is that possible? On our HUD-1 statement it has mortgage insurance in the payment before escrow. Do I have any legal rights to not pay? Are there laws that require “A” to tell “B” about the PMI?

  72. Colin Robertson October 20, 2015 at 3:02 pm -


    Were you paying the PMI or did escrow miscalculate? If you were supposed to pay PMI you should probably pay it, even if a mistake was made.

  73. Jane October 23, 2015 at 1:56 pm -

    Would a previous loan modification impact cancellation/termination?

  74. Colin Robertson October 26, 2015 at 4:18 pm -


    It could because the loan modification may determine a new value for your home and a new timeline to reach 78-80% of that new value. You may want to contact your servicer to see if they have an estimated date of PMI removal and what it’s based on.

  75. Erin October 28, 2015 at 10:06 pm -

    I just purchased a home with PMI on a conventional loan. With the purchase price my LTV is 83%. But with the appraisal the bank ordered its 79.6%. Now that I have the loan can I ask for the PMI to be removed based off their appraisal? If not, it’s also a fixer so I am putting a lot of work into it. When would it be worth it to get my own appraisal to get the PMI off.


  76. Colin Robertson October 29, 2015 at 9:40 am -


    There may be a minimum period of time the PMI has to remain in-force…contact your servicer or check your paperwork to determine that, and also ask if improvements to the home will allow you to remove it sooner.

  77. Charles Jennings November 10, 2015 at 2:21 pm -


    You should reach out to me. I can explain to you where the 75%, minimum 2 years, and other odd caveats come from when relating to PMI. These particular items are not mentioned in The Homeowners Protections Act (HPA) — they’re secondary market guidelines. The secondary market are where seasoning requirements come from.

    HPA does not have any seasoning requirements associated with it. I love the fact that you’re taking the time (consistently too!) to help these people out. While I cannot dedicate the kind of time you do, I would like to take a little bit of time to help increase your already great knowledge-base surrounding PMI.

    I’m a Real Estate Servicing Manager (and by default a compliance officer) for a large institution and consider myself a subject matter expert regarding PMI.

  78. Colin Robertson November 19, 2015 at 10:21 am -


    Feel free to share some major points here if you’d be so kind. It’d be great to post those summarized secondary market guidelines for others to see. Thank you!

  79. Elliott December 1, 2015 at 10:25 am -

    Hi Colin, My question is if I refinance does my automatic termination of PMI date change? My mortgage papers say 4/1/2017 is the automatic cancellation date. I am wanting to refinance w/o PMI of $235. The appraisal of my home is lower now considerably since the crash at $350K as opposed to 430K when I refinanced in 2009. I owe $345K now, have great credit but want to get a better interest rate and not have to pay PMI. My rate is 51/4 now. I read from previous posts that the PMI should come off automatically when “scheduled” to reach 78%, this 4/1/17 for me, even if the appraised value is lower? Should I wait until then to refinance? Your thoughts?
    Thank you in advance!

  80. Colin Robertson December 1, 2015 at 1:25 pm -


    Automatic termination is based on the original loan…if you refi it would be based on the new loan’s amortization. I’m assuming you’d want to refi now if you could get a value high enough to remove the PMI (80% LTV or less) and get a lower rate.

  81. Elliott December 2, 2015 at 8:20 am -

    Thanks Colin, Yes, the B of A rep. says I should refinance now for the interest rate but I would still have to pay PMI. If I refi now I would have to pay PMI until I reach 80% which could be years. I would save on interest though. I have 16 months before PMI will automatically terminate on my current loan. Should I wait until then to refi? Further, will my PMI automatically terminate even if my home appraisal is less than the appraisal when I refinanced the first time? Thanks!

  82. Colin Robertson December 2, 2015 at 12:43 pm -


    Automatic termination is based on original property value once original loan hits 78% LTV based on amortization schedule. The borrower request option at 80% LTV rule states that the property must not have declined below the original value, which they’d likely determine via appraisal. You’ll have to do the math to see what route is better. Like you said, refinancing now and paying PMI for several more years is a negative but you get a lower rate. Ideally it’d be best to refinance to a lower rate while also removing PMI. This can be achieved either by getting a favorable appraisal to get to 80% LTV, waiting for the property to increase in value, and/or paying down your mortgage balance at closing to get to 80% if it’s close.

  83. Kirsten December 2, 2015 at 5:56 pm -

    Hi Colin – This page is great and your steady answers to questions are awesome!

    I have a 30-year fixed. Automatic termination of PMI was scheduled for 12/1/15; however, my December payment due amount still includes the PMI amount. My understanding is that I do not need to make anymore PMI payments after termination date.

    My mortgage servicer is saying that even with a 12/1 termination date, I still need to pay the December PMI payment, which is taken out of my escrow on the 10th of each month.

    Are they correct, or can I dispute with them the December PMI payment?


  84. Colin Robertson December 3, 2015 at 9:45 am -


    Might be due to the payment being made in arrears, paying for the month after the fact.

  85. Rose December 7, 2015 at 9:05 am -

    I bought my house june 2013, after the new permanent MIP requirement. However I was not happy when I realized the mortgage company had my FHA loan MIP all front loaded in the first 5 years. Never mind that the interest for a house loan is typically front loaded anyway but this was a second tier of front load interest. I had thought the MIP would be equally spread out in 360 months. So my mortgage increased from the original quote by $400 a month. Do all MIP’s (not the loan)require to be front loaded or this was just how the broker packaged mine for some reason? I need to know if next time I can make sure to request that MIP be equally spread out if possible.

  86. Andy December 7, 2015 at 7:18 pm -


    I bought a house in 2013 with a 97% conventional loan. I had excellent credit and great income, but not a lot of downpayment money. I went with an upfront PMI (single premium) of 3% of the home value to avoid long term PMI payments. Life changed and I sold the home (for a hefty profit) in 2015. I had understood the Homeowners Protection Act applied to upfront mortgage insurance and that I would be owed a refund prorated for my time owning the home. Since I was scheduled to hit 80% LTV in 8 years or so, I thought my 2 years of ownership and paid in full status would entitle me to a ~75% refund of my initial upfront PMI payment.

    To my surprise, the mortgage company and MGIC are saying the HPA of 1998 doesn’t apply to home sales. Had I paid down the loan to 80%, I’d be entitled to a refund, but since I paid it off in full I get nothing.

    This seems exactly backwards to me. I’m being punished for paying it all off in full. It was never disclosed to me before or during closing that I was getting a non-refundable PMI.

    Any tips on getting any of that upfront premium back or am I out of luck? It’s a handsome chunk of change – around $5-6k.



  87. Colin Robertson December 8, 2015 at 10:42 am -


    Sounds about right, though I believe MGIC offers both Refundable and Nonrefundable single-premium MI, which probably should have been mentioned somewhere I would think. You likely paid far less for Nonrefundable coverage and upfront versus monthly.

  88. Suzanne Heitzman January 3, 2016 at 2:38 pm -

    Colin, thank you for the above article. My husband and I purchased a house in 2013. Once we received a check from our previous home sale we placed a large amount down on our loan. This happened within the first three months of purchasing the house and it was well above the 80%. We called the loan (BB&T) and paid for a recast. This reduced our PMI. We thought it would automatically change the PMI. Now three years later we are selling this house. Upon selling we realized PMI was not taken off. I contacted the mortgage lender immediately. The amount we paid was about 2,000. They responded we needed to write a separate letter to the PMI department. Needless to say we don’t recall receiving this instruction from them. If so, we would of done this!. They are now stating it was documented in the original loan commitment. The hundreds of papers signed at closing. I am appealing through letters and phone calls. Any advice. Thank you

  89. Colin Robertson January 6, 2016 at 11:40 am -


    I believe PMI doesn’t just fall off if you make a large early payment to lower your need to request that they remove it if you pay it down early.

  90. John Showalter January 10, 2016 at 8:34 am -

    Question. If the borrower has PMI and defaults on the loan, what happens? Does the PMI benefit pay off the loan and the lender then owns the house debt free? That would sure be a sweet deal for the lender.

  91. Colin Robertson January 11, 2016 at 2:06 pm -


    PMI just covers part of the lender’s risk, not all of it. So in the event of a covered PMI claim, a portion of the outstanding balance is paid by the mortgage insurer and the lender is still on the hook for the rest.

  92. Walter January 13, 2016 at 1:33 pm -

    2013 January. Refinance house for 212K, Home value at the time was 250K. 84% LTV. Now I owe 202K, House valued at 300K. 67% LTV. My contract says something about waiting 5 years before PMI can be removed. If I submit an appraisal showing 300k value. Is bank required to remove PMI? I do not want to refinance due to my 3.25% interest rate.

  93. Kris January 13, 2016 at 2:56 pm -


    I have a PMI question for you. We built our house three years ago and it was originally appraised at 280,000, according to the bank. Our PMI is about $140 a month right now and our loan balance is now $247000. Last summer we put about $70,000 in to the backyard with a pool, bar, fence, patio, walkway ect. The county also reassessed our home at $306,000. I called my mortgage company about how to remove the PMI considering the home gained value and I am close to the 78% mark. They said I need to use one of their appraisers and pay $400 to have it appraised. Do you think it is worth it to pay the $400 and roll the dice hoping it appraises at 306-310? Or would I just be wasting my money?

  94. Erin January 13, 2016 at 3:11 pm -

    I refinanced my home in December and just received my escrow refund and it shows that PMI was taken out twice in the month of December. My first question is do they have a right to a premium, in full, for a month they only held the liability for 11 days? My second question is there any reason they would take out a second premium?
    Thank you in advance for your help and I hope to hear from you soon.

  95. Colin Robertson January 14, 2016 at 10:26 am -


    Check your paperwork to see exactly what it says…good chance you can use new value to show LTV below 78% and remove PMI…may need to pay for an appraisal though.

  96. Colin Robertson January 14, 2016 at 10:31 am -


    Your call but if you actually made substantial improvements it should be worth more…and that $400 can be recouped in less than 3 months if you’re paying $140 a month…

  97. Kelly January 21, 2016 at 11:26 am -


    I purchased a single family rental property 10 years ago. 30 year fixed mortgage with local bank providing mortgage. 10% down. The mortgage was sold immediately and is now part of fannie mae. From a pmi standpoint do the original mortgage terms still remain in effect or can they change the pmi terms to meet the fannie mae guidelines. These terms between the original mortgage paperwork and fannie mae differ regarding termination requirements.

  98. Colin Robertson January 25, 2016 at 5:04 pm -


    Fannie Mae and Freddie Mac have their own MI cancellation policies that work in accordance with the HPA. The loan was likely underwritten to Fannie’s guidelines by the PMI company when it was originated.

  99. John January 29, 2016 at 7:53 pm -

    With an fha loan does the pmi rate differ by state?

  100. Colin Robertson February 1, 2016 at 9:53 am -


    No, it’s based on loan amount, term, and LTV.

  101. Jim February 3, 2016 at 10:47 am -

    Who typically has 20% saved up in metro areas like DC, NYC, San Fran, etc.? The average price for townhomes here is $400,000 or more. I don’t know many people who have an extra $80k + just sitting around.

  102. Larry February 4, 2016 at 6:43 am -

    Can a borrower be required to pay the PMI in a lump sum, up front, and then be told that none of the money will be refunded when the loan is either paid off or LTV below 80%?

  103. Colin Robertson February 4, 2016 at 9:15 pm -


    Borrowers have a choice of how they want to pay PMI, such as upfront or monthly, refundable or non-refundable, the latter being cheaper, or lender paid, etc. Some premium may be refundable depending on type of PMI and/or if Homeowners Protection Act of 1998 applies. If you’re unsure have the PMI company break it down for you as clearly as possible.

  104. Lorene Schenk February 5, 2016 at 12:23 am -

    Why hasn’t our government challenged lenders, PMI, and MIP companies about unfair, inconsistent polices and practices? Are lenders, PMI, and MIP companies exempt from full disclosure? Insurance lobbyists need to be held accountable to the American public like anyone else.

  105. Staci February 17, 2016 at 7:38 am -

    We purchased our home over 7 years ago, 8 years in September. Our original mortgage company sold our loan a few years ago. We received a letter in the mail recently stating that our loan requires PMI all of a sudden. We have a USDA loan which did not require PMI when we closed years ago. We have also never been late on a payment. I called our mortgage company and she told me to fax the letter to them with a brief statement about what is going on. She asked me what mortgage company our loan was with originalally and I told her. On our payments, it reads that the current mortgage company we are with now is just a branch of the original company that held out loan. I asked her how they can legally do this. She claims that our loan is a USDA PMI loan and he didn’t know why PMI was not already figured in. That is not what we were told, nor what we signed 7 years ago. MY question is, can they legally do this? We have had lots of issues with this company/companies through the years.

  106. Jean February 18, 2016 at 10:22 am -

    Hi Colin –
    I have an issue that I need some info on. We purchased our home last year. Our first payment was Sept 1st. Our home appraised at $157,000, we purchase for $135,000 and our loan amount was for $128,500 (requiring PMI). At closing, our “projected” PMI payment per month was $66.27. We just received our Escrow statement notifying us that there is a shortage of $770 and our new mortgage payment as of April 1st will be $1,257 when our payment has been $910 – as stated at closing. We have a fixed, 30 yr loan. The new payment amount and shortage in our escrow acct is due to a property tax increase of $500 AND our PMI insurance going from $66 a month to $246 a month (essentially we were paying .57% of our loan amount in PMI – low risk to 3% of our loan amount – which I have read is “high risk”). In our loan docs it says “projected” PMI payments are expected to be $66.26 until Sept 2023. We have not received anything from the PMI company notifying us of the increase and why and in our loan docs on the PMI disclosure it states this loan is considered low risk. Our credit score is in the upper 700’s and we have NEVER missed a payment (they have all been paid early). I understand the increase in the payment to cover the increase in property taxes, but the PMI monthly premium almost quadrupled without any warning. Our payment is now $300 higher than what it was at closing only 6 months ago – and we owe $770 to our escrow account on top of the monthly increase due to the difference in the PMI payment for Jan – March of this year ( mortgage company says our payment won’t increase until April 1 this year). Can your PMI premium increase that much after only 8 months into the loan? It seems counter productive. You have PMI insurance to cover the lender in case you default. But the one thing that might make you default is a $300 a month increase in your mortgage payment with only 2 months warning. Can the PMI company do this and do we have any recourse since our loan docs state otherwise? Also, what might be our chances of getting PMI canceled due to our appraisal coming in at $157,000 and our loan amount being $128,500? That puts us over 20% equity. Any advice or information that you can give would be appreciated before I call the lender – I’d like to know what our rights are and have my ducks in a row. Thank you.

  107. Jean February 18, 2016 at 11:12 am -

    I should also mention this is a conventional, 30 yr fixed loan on a primary residence. The word that troubles me in our loan docs is “projected”. We have an amortization schedule showing our “projected” payment amount of $910 until yr 2023 with PMI at $66.26. Does “projected” mean they can change the PMI premium after closing?

  108. Colin Robertson February 19, 2016 at 3:08 pm -


    You may want to ask the lender why your paperwork has you paying the low risk premium and now it’s the high-risk pricing, if that’s indeed what is happening. I’m assuming the lender ran the numbers with the correct premium payment to ensure you actually qualified for the loan DTI wise and so on, but only the bank would know. You may need to speak with the lender, servicer, and PMI company to figure out exactly what’s going on. I don’t know that bank errors go in the favor of the consumer. If you are indeed stuck with the higher premium you could look into refinancing if you think you can get down to 80% LTV and drop PMI entirely. Rates may also have dropped since last year.

  109. Dan February 22, 2016 at 8:16 am -

    I think my question is simple but when it comes to the banks no so much.
    I purchased my home in June of 2010 with PMI ? Mortgage was paid every month on time for the past 5 1/2 yrs I was forced to retire in 2014 due to intensive work related surgery . I am now in a short sale as of 11/2015 . My question is if PMI insures the bank why am I responsible for the shortage of and when it sells . At this time the bank already refused an offer from a buyer and now it’s on the market for another 120 days I’m living in a home im not paying for not my style. They bank told me after 120 days without a buyer I could leave my home (in deed of lieu) but now FHA says no. I’m at my wits end I’ve done everything they asked and I’m ready to just walk away
    Any advice would be helpful
    Thank you

  110. Colin Robertson February 22, 2016 at 7:02 pm -


    Do you mean responsible in terms of taxes or the deficiency balance? In general, a short sale or deed in lieu may be negotiated so the lender agrees not to pursue a deficiency judgment. PMI just covers a slice of the mortgage, not the whole thing.

  111. Andy March 17, 2016 at 7:41 am -

    I purchased a house in 2007 with the intent for it to be my principal residence, which it was for 4 years. However, five years ago I converted it to a rental property, since it is underwater and I couldn’t, and still can’t, afford to sell it. When I contacted my mortgage servicer about dropping the PMI, they told me that since it is no longer my principal residence, the Homeowners’ Protection Act doesn’t apply, and I would need to drop the LTV based on today’s value, not the original purchase value, in order to drop PMI. Are they correct?

  112. Michael March 20, 2016 at 10:32 am -

    What about if I am good and at 65% and I have never missed a payment but I got a loan modification. Does a loan modification have any bearing on whether they will cancel the PMI or not?

  113. Colin Robertson March 22, 2016 at 11:45 am -


    Not sure why you’d get a loan mod if your LTV is 65% and your payment is manageable…can you not qualify for a refinance and drop your PMI that way? Or request it be dropped before you apply for a loan mod? If so, it might be wise to ask the modification company what will happen with your PMI before you proceed.

  114. Colin Robertson March 22, 2016 at 11:49 am -


    Today’s value would probably be better since I assume the home value has gone up since. The downside is you’d probably need to pay for an appraisal.

  115. Andy March 23, 2016 at 5:56 am -


    Thanks, but no, my house is still underwater. I bought it for 278k (it appraised at the time at 295k). At its lowest it dropped to around 120k, and now it is worth about 175k. I was going to pay cash to bring the LTV down to 80% of the original purchase value to drop PMI, however, the mortgage servicer told me that was no longer applicable since I moved out. I would have to pay down to 80% of current value. If I had that kind of cash laying around I wouldn’t just drop PMI, I would refi out of this awful mortgage. $400 for an appraisal would be a drop in the bucket.

  116. Michael March 23, 2016 at 8:57 am -

    Thanks for responding Collin, I already had the loan modification and just completed it, I had never missed a payment but broke my back in a accident and lost my job and became disabled so I thought I was going to have troubles covering the mortgage so I applied for it several years ago and just completed it , I was just wondering if you could cancel the PMI if you have had a modification in your history? The loan modification was with my mortgage company, I thought maybe they would not let me cancel the PMI because I was a risk of sorts in there eyes by having the loan modification done. Until reading your article I did not even know what a PMI was or if I had one to start with, I bought my house for $86,500 and currently owe $63,000 on it with no missed payments, my local town assessed the house on my taxes for $100,000 even though I heard they can’t go by that, that they go by independent assessments that you might have to pay for, I just wanted to get some information before I call my mortgage company to see what the status of my PMI is or if I even have one and was wondering if having that loan modification would be an issue for canceling the PMI if I have one or if they haven’t canceled it already? Thanks for your help

  117. Mario Pereira March 23, 2016 at 9:08 am -

    Is there a rule that says an Insurance company won’t provide PMI if the builder and the homeowner are the same person? In other words I built my own home and the lender is saying that the insurance company will not provide PMI.

  118. Ron March 26, 2016 at 11:50 am -

    Hi Colin,

    We are looking at purchasing a home for $250,000 that the owners have no mortgage on. If the owners take back a note for 30,000 (@4%) and we put down $20,000 will this let us avoid pmi? Thanks for providing this site and info.

  119. Colin Robertson March 26, 2016 at 5:38 pm -


    Depends on the loan mod and where you’re at LTV wise. Best to research and get all the numbers to see what your best path will be.

  120. Colin Robertson March 26, 2016 at 5:38 pm -


    It might depend on the PMI company, though many if not all may have a similar exclusion. I don’t know for sure.

  121. Colin Robertson March 26, 2016 at 5:51 pm -


    The key would be taking out a loan from the lender at or below 80% LTV to avoid PMI so long as they accept seller carrybacks. Also consider the costs involved for both scenarios if the non-PMI route come with higher interest rates.

  122. James April 9, 2016 at 1:02 pm -

    Should the mortgage insurance i had to carry, cover the Heloc i took out on a now foreclosed home?

  123. Nedalie April 14, 2016 at 3:05 pm -

    I closed on my loan 22 November 2010. Fixed conventional with 85%LTV. My PMI disclosure states Automatic Termination on November 1 2014. RoundPoint Mortgage has had my loan the last few years and they will not drop the PMI and refund me my money. They are insisting that I have to pay for an appraisal. What can I do?

  124. Nedalie April 14, 2016 at 3:15 pm -

    Sorry I forgot to add that we have NEVER been late on a payment either.

  125. Colin Robertson April 18, 2016 at 10:24 am -


    Review your documentation to see if there’s a clause relating to a drop in value…I assume lenders are wary of home price declines in the past several years as grounds to block PMI from being dropped.

  126. Colin Robertson April 18, 2016 at 10:45 am -


    Mortgage insurance is for the lender’s protection and tied to the loan you take out that exceeds 80% at time of origination.

  127. John April 18, 2016 at 6:51 pm -

    We are adding 1000 sf upstairs during a home improvement and plan to pay part cash and a 2nd lien loan for the improvement

    We are close to the 80% at the moment but have turned a 4 bedroom into a 2 bedroom by opening up the home and removing walls – amazing outcome.

    The additional 1000 sf and 2 more bedrooms, with high end materials will easily place our LTV under 80%

    The question is what will be the effect of the 2nd lien?
    Ive read LTV 70%

    what is your observation of using a 2nd lien home improvements and a new appraisal to remove PMI?

  128. Richie April 20, 2016 at 1:16 pm -

    Hi Colin,

    PMI question for you. I was reluctantly paying $299/mo for PMI and recently made an additional principal payment to get my mortgage down below 80% of original value. Bank removed PMI, all good. Except, I made the additional principal payment end of March and they just recently charged me the “normal” April 5th PMI payment of $299 AND an additional final PMI on April 11th of $220. Bank says it’s a standard PMI closeout fee, 1.5 months of PMI, can’t be waived, part of contract, etc. (I don’t even think I ever saw a PMI contract btw…)

    Anyway, am I getting ripped off? Normal payment in April when loan value reduced in March? And then another final PMI payment too?

  129. Colin Robertson April 23, 2016 at 10:50 am -


    Not sure Richie…maybe ask them to reference the “paperwork” in question so you can see it with your own eyes.

  130. Colin Robertson April 23, 2016 at 11:21 am -


    Sounds like your home will be completely different when all is said and done…probably a good idea to ask your PMI company because the presence of subordinate liens can stop you in your tracks. Alternatively, there may be the option of taking out a second mortgage to do the improvements, then refinancing both loans into one new loan at an LTV of 80% or less (if the value will be that much higher) that drops the PMI and ideally comes with a new low rate. But you may not want to do that for one reason or another.

  131. marlene g April 26, 2016 at 1:34 pm -

    hi, have a question. I’ve been trying to get my pmi removed plus interest at 6.7% did my try’s at refin. didn’t qualify with appraisal then reach 80% last year and still didn’t qualify. well now at 78% a year ahead of scheduled date. called and spoke to company holding loan their stated have to do another appraisal. but my paper’s state automatic termination when LTV reaches 78% on date 6/1/2017. I’ve reached that 78% last month and don’t believe i have to do another appraisal home purchased in 2007. feel it should automatic terminate i know that they changed the real estate law again in 2013. but going by my contract from 2007 . please advice, thanks

  132. Colin Robertson April 28, 2016 at 3:09 pm -


    If your paperwork says it’s set to reach 78% in June 2017 that’s probably when they would automatically remove it. If sooner probably need an appraisal to justify. Depending on the cost of PMI each month the appraisal fee could make sense to pay if you’re confident the home is at value.

  133. marlene g April 29, 2016 at 1:27 pm -

    thanks again for the help

  134. Hector B May 4, 2016 at 10:00 am -

    Hi Colin, Great information and thank you for helping so many folks out. My question revolves around the cost of PMI. Normal homeowners insurance to replace an entire house is no where near the annual cost of PMI. And PMI just covers the 20%. Why is there such a large disparity between the two? Are there any governing bodies limiting the amount they can charge? I feel like the insurance companies and the lenders are in this together as another product (although necessary and I get it) to gouge American consumers. The cost of PMI does not justify its intended purpose and the cost could easily be less. Am I missing something other than its my choice to take it or leave it? Many thanks for your response.

  135. Colin Robertson May 4, 2016 at 2:34 pm -


    Good question Hector and I’m glad you realize it’s necessary. I guess the main difference is that PMI is entirely avoidable (unlike homeowners insurance) if you actually put down 20% and get some skin in the game. As for the price, they may have to charge X amount for some capital buffer or something. I’m not quite sure why the rates are what they are.

  136. Lindsey June 3, 2016 at 1:15 pm -

    We just refinanced out of FHA and into conventional loan with PMI. Our first payment is due with nearly twice the amount of PMI disclosed at closing. Can PMI be increased after closing like this?

  137. Colin Robertson June 7, 2016 at 2:41 pm -


    Might be a misunderstanding about the cost – should probably contact the lender/servicer/PMI company ASAP to determine what the payment is and why the paperwork deviated.

  138. Viv June 20, 2016 at 9:15 pm -

    I don’t even know where to begin… In 2007 my mother purchased a home for 278K, put down 16K. Fast forward today…after a bankruptcy, near foreclosure, and modification she currently owes 280K. The current value is 238K (extremely upside down) I decided to help my mom get her payments under control to realize that she has been paying a PMI of approximately $700/mo. Yes, you read correctly, $700! My mother was not aware that she signed such a high PMI. No one I have spoken to in the mortgage arena or realty arena can believe the amount she has paid to date in PMI. Countrywide was the lender and then it was sold to BOA and now another Servicer with Fannie Mae as the investor. Is there anything we can do. She is at the point of walking away. This is $8,400/year. What can we do?

  139. John P. June 21, 2016 at 11:47 am -

    Re: FHA loans with MIP, not PMI. I wish I could just read one person who put in writing an easy to understand truth about removing FHA MIP. HUD FHA loans, where the borrower puts down the minimum, will continue to pay MIP for approximately 10-14 years, based on normal payment amounts (ie. no extra principal). Why is everyone under the impression that MIP will “go away” after 5 years. That is so misleading and hard for people to get. PEOPLE, your MIP will continue for a lot longer than 5 years and depending on when you got your loan, it could continue for the term of the loan. Today’s “estimated” market value has NO BEARING on the removal of MIP. If you doubt me, call HUD. Regards, John Public.

  140. Colin Robertson June 24, 2016 at 4:15 pm -


    That’s pretty brutal…tougher if the loan is already modified, but perhaps speak with a few knowledgeable lenders/brokers to see if anyone can either refinance the loan and get the PMI way down or seek another, more favorable loan modification. That seems absurd.

  141. Kyle July 7, 2016 at 5:05 pm -

    Is it possible to contact my PMI servicer (Essent) to buy out the mortgage insurance? I was told I might be able to do this by my lender. We planned on paying for it in closing, but the mortgage cops said it would make the total fees in the loan too high.

  142. Colin Robertson July 7, 2016 at 6:10 pm -


    I suppose you can give them a call…always the chance of refinancing again with a higher value or getting upfront PMI or LPMI and still getting a lower interest rate with little/no cash out of pocket.

  143. Paula July 11, 2016 at 11:22 am -

    Mom and Dad’s name on loan. Dad loses job and got a low income contractor job, then mom passed away. It’s just been 15 months since home was purchased. Dad may not be able to make payments on his own, but is trying to keep house. Home value (Zillow, Redfin, Trulia) says it’s up from $225k to $270k.
    1 – Can Dad request PMI to be removed?
    2 – Will it require credit and income check again? It’s an issue since dad doesn’t have proof of stable income yet.
    3 – Will the Dad be forced to refinance if they know mom passed away?

  144. Debra July 12, 2016 at 9:39 am -

    Hello! We financed our current home through VA 2 years ago. The bank told us VA required mortgage insurance. They charged us over 4600.00 dollars. I’m now reading that VA does NOT require mortgage insurance! I looked at our VA loan disbursement and no where on there does it mention the 4600.00. I think we’ve been cheated by the bank and they pocketed the money!! I’m not sure how to proceed. We of course want that money back!! Should I call VA and see if they have received the money or go to the bank and request the money back or just see a lawyer. That’s a lot of money!! They stick you enough as it is!! We have excellent credit, as a note. Please help!! Thank you!

  145. Colin Robertson July 12, 2016 at 10:58 am -


    There might be a 2-year wait to remove PMI without refinancing regardless of current value.

  146. Colin Robertson July 12, 2016 at 7:02 pm -


    It might be a case of semantics…perhaps it was the VA funding fee?

  147. Brian July 13, 2016 at 12:52 pm -

    What exactly is the bank being paid for by the PMI company? What is the reason for foreclosures at higher costs recently? Banks make enough money from the higher interest rates, repayment schedules and fees. Why do they feel the need to make more money from house. I think all PMI should go away. If you don’t have 20% then your interest goes up a little. Banks are in the business to make money but they should take some risk, they do each day with our money. If you can’t tell, I don’t like banks. I am trying to get into flipping and the banks are running me around and discouraging me.

  148. Colin Robertson July 14, 2016 at 1:47 pm -


    You can take a higher interest rate in exchange for not paying PMI directly.

  149. Sandy August 8, 2016 at 3:25 pm -

    Colin, we lost our home to foreclosure. I still think our lender, Wells Fargo, did us wrong, but we walked away. We rented homes a few years. We finally were able to purchase a home, borrowing down payment and started to breathe again. Less than two months later, we got notice that PMI was suing us for $90k. That’s the difference from what we owed and it sold. We are still paying PMI for this shortage. Is there any legal recourse for us? It’s straining us terribly.

  150. Colin Robertson August 9, 2016 at 1:16 pm -


    I’ve heard of this happening but I don’t know the best route/solution unfortunately.

  151. Eric August 20, 2016 at 3:37 pm -

    I have read a few articles that have stated that you can pay PMI upfront. Is that still true in today’s market, and what would the percentage rate on that be?

  152. Colin Robertson August 22, 2016 at 7:37 pm -


    Yes, it’s usually an option that is covered via a lender credit or out-of-pocket. Hard to say the exact cost…typically it raises your interest rate by some percentage…whether it’s .25% or .50% or more is difficult to determine without knowing all details such as loan amount and getting the lender’s pricing, etc.

  153. tammie September 8, 2016 at 9:29 pm -

    I am in the process of Refinancing (FHA) and my LTV is 70%. Is it required to pay for mortgage insurance?
    new loan is 117,000 but the appraisal value is 165,000.

  154. Colin Robertson September 9, 2016 at 9:26 am -


    If the loan is another FHA then MI is required, if moving to a conventional loan you can avoid it with an LTV at or below 80%..

  155. tammie September 9, 2016 at 1:27 pm -

    ok thanks for the information.

  156. Lisa Moorman September 24, 2016 at 2:25 pm -

    When a loan is sold will the PMI payment change. When the home was originally purchased it was a “conventional” loan. The loan was later sold and we were notified that the PMI payment was well over $400 monthly. there had not previously been PMI

  157. Colin Robertson September 28, 2016 at 2:13 pm -


    I’m assuming the new loan had mortgage insurance…if a loan is refinanced into a new loan it’s possible the new loan could have PMI if the LTV warrants it.

  158. Wanda Cogar October 4, 2016 at 2:36 am -

    I am trying to get my PMI removed. I owe $116,783 and they say my home was worth $159,700 back in 2010. My home is valued at $234,000 by their company I used to get an AVM. My house was damaged last year by a hail storm. They know that because they got the insurance check for $30,000 for repairs. New roof, new siding, new windows, and I purchased stone that never was on the house. Basically adding value to the home. They want an appraisal. I think that is ridiculous since I already met the LTV. What is my recourse other than putting out this appraisal money?

  159. Colin Robertson October 4, 2016 at 10:10 am -


    Not sure there is any alternative…generally an appraisal is required to remove PMI early. Annoying sure, but just because “they know what it’s worth” doesn’t cut it when large insurance companies are involved. Paperwork is a necessity sadly.

  160. Stefanie October 21, 2016 at 1:46 pm -

    We own one acre of ground and currently live in a mobile home on it. We are looking to build soon. We had been told we could use our land as our 20% down payment. My question is are we still going to be required to have PMI insurance?

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