Mortgage insurance can make it easier to buy a home with a small down payment — but once you’re a homeowner, it becomes an extra monthly cost you’ll probably want to get rid of.
The good news? You don’t have to keep paying mortgage insurance forever.
In this guide, we’ll show you how to remove PMI from conventional loans and FHA mortgage insurance (MIP) in 2025. Whether you’re planning to refinance, pay down your loan faster, or simply reach the right equity level, this article will walk you through your options step by step.
🏡 What Is Mortgage Insurance? Quick Recap
Mortgage insurance is required when you:
- Put less than 20% down on a conventional loan → You pay PMI (Private Mortgage Insurance)
- Get an FHA loan (backed by the government) → You pay MIP (Mortgage Insurance Premium)
It protects the lender, not you, in case you default on your loan.
💰 Why Remove Mortgage Insurance?
Removing mortgage insurance means:
- Lower monthly payments
- Saving thousands over time
- More money toward principal or other financial goals
Let’s say your PMI is $150/month. Over 5 years, that’s $9,000 — money that could’ve gone into savings, investments, or home improvements.
🔍 How to Remove PMI (Private Mortgage Insurance)
🟩 For Conventional Loans
PMI is easier to remove than FHA MIP. Here are the three main ways to get rid of it:
✅ 1. Automatic PMI Cancellation (by Law)
According to the Homeowners Protection Act, your lender must automatically cancel PMI when:
- Your loan reaches 78% of the home’s original value (Loan-to-Value Ratio, or LTV)
- You’re current on your mortgage payments
📌 This happens without you needing to request it.
✅ 2. Request Early PMI Cancellation
You can ask your lender to remove PMI early once you reach 80% LTV (loan-to-value).
Requirements:
- You’ve paid down your loan to 80% of the original appraised value
- No late mortgage payments
- You may need to pay for a new appraisal to prove the home’s value
🧠 Tip: Home values have risen in many markets — a new appraisal could show you already have 20% equity.
✅ 3. Refinance Your Mortgage
If your home has appreciated or you’ve paid down the loan significantly, refinancing to a new loan may eliminate PMI.
Example:
- Bought home for $250,000 with 5% down
- Now home is worth $300,000 and loan balance is $200,000
- You now have 33% equity, so PMI is no longer required on the new loan
💡 Refinancing may also help you get a better interest rate.
🔁 How to Remove FHA Mortgage Insurance (MIP)
FHA mortgage insurance is harder to cancel, but not impossible. It depends on:
- When you got your loan
- How much you put down
- Whether you refinance
🟥 1. FHA Loans After June 3, 2013
| Down Payment | Can You Remove MIP? |
| Less than 10% | No — MIP is for life |
| 10% or more | Yes, after 11 years |
So if you only put down 3.5%, MIP stays for the life of the loan — unless you refinance.
✅ 2. Refinance to a Conventional Loan
This is the most common way to remove FHA MIP.
Requirements:
- At least 20% home equity (based on appraisal)
- Good credit score (typically 620+)
- Stable income and debt-to-income ratio
🎯 Once you refinance, PMI isn’t required, and you’ll eliminate FHA insurance.
✅ 3. Use an FHA Streamline Refinance (Limited Option)
This program lets you refinance your FHA loan with reduced paperwork, but it does not remove MIP — it may reduce it slightly.
🧮 Example: Real-Life Scenario
Ayesha bought her first home for $200,000 with 5% down in 2020. Her PMI is $120/month.
In 2025:
- Her home is now worth $260,000
- Her mortgage balance is $170,000
- Equity = $90,000 → LTV = 65%
She requests PMI cancellation and provides an appraisal. The lender removes PMI, saving her $1,440/year.
✅ Total 5-year savings = ~$7,200
💡 How to Know If You Qualify for Removal
Ask yourself:
- Has your home increased in value?
- Have you paid down your loan to below 80% LTV?
- Are you current on payments?
- Has it been at least 2 years since you got the loan?
📞 Call your lender and request a PMI cancellation review.
📊 LTV: Understanding the Key Number
Loan-to-Value Ratio (LTV) = Loan Balance ÷ Home Value
| LTV | What It Means |
| 90% | You have 10% equity |
| 80% | You have 20% equity — cancel PMI |
| 78% | Automatic PMI cancellation applies |
| < 80% | Eligible to refinance without PMI |
Use online calculators or talk to your lender for exact numbers.
📁 Documents You May Need
To remove mortgage insurance, prepare:
- Most recent mortgage statements
- Appraisal report (if required)
- Proof of on-time payments
- Income verification (for refinance)
Your lender may charge a small fee for processing or appraisal.
🧠 Tips to Remove Mortgage Insurance Faster
- Make extra payments toward principal
- Refinance after home appreciation
- Improve credit score for better refinance rates
- Track your LTV regularly using a mortgage tracker app
✅ Benefits of Removing Mortgage Insurance
- Lower monthly payment
- Increased savings
- Build equity faster
- Greater control of your budget
- Better loan flexibility when refinancing or selling
❌ What NOT to Do
- Don’t stop paying PMI without lender approval
- Don’t assume appreciation alone cancels it
- Don’t wait until 78% LTV if you’re already at 80% — request removal early
🏁 Conclusion
Mortgage insurance is a helpful tool when you’re buying your home — but once you’ve built enough equity, it’s an unnecessary cost.
Whether you’re paying PMI on a conventional loan or FHA MIP, 2025 is a great time to review your loan and see if you’re eligible for cancellation or refinance.
By understanding the rules, using smart equity strategies, and talking to your lender, you can remove mortgage insurance and save thousands over the life of your loan.
📞 Call your lender today — your future self will thank you!