Private Mortgage Insurance (PMI) is a type of insurance that protects the lender if you default on your mortgage. It's typically required if you make a down payment of less than 20% of the home's purchase price, meaning your loan-to-value (LTV) ratio is greater than 80% at the time of purchase.
When Can You Remove PMI?
There are several ways to get rid of PMI, potentially saving you a significant amount of money each month:
Homeowner-Requested Cancellation (80% LTV): You can typically request your lender to cancel PMI once your loan balance reaches 80% of your home's original appraised value. This usually requires a good payment history and no junior liens on the property.
Automatic Termination (78% LTV): Under the Homeowners Protection Act of 1998, your lender is generally required to automatically terminate PMI when your loan balance reaches 78% of your home's original appraised value, provided you are current on your mortgage payments.
Early Termination Due to Appreciation (80% or 75% LTV of Current Value): If your home's value has increased significantly since you purchased it, you might be able to request PMI cancellation sooner. Many lenders will allow you to cancel PMI if your loan balance reaches 80% (or sometimes 75%) of your home's current market value. This usually requires a new appraisal to confirm the increased value.
How Our Calculator Helps
Our PMI Removal Eligibility Calculator helps you determine if you meet the common criteria for removing PMI. By inputting your original loan details, current loan balance, and optionally your home's current market value, the calculator will show you your current LTV ratios and indicate your eligibility for removal based on standard guidelines.
Important Considerations:
Lender Policies: While federal law sets minimum standards, individual lenders may have slightly different requirements or processes for PMI cancellation. Always contact your mortgage servicer to understand their specific policies.
Appraisal Costs: If you're seeking early termination based on increased home value, you'll likely need to pay for a new appraisal, which can cost several hundred dollars. Weigh this cost against your potential PMI savings.
Payment History: A good payment history (no late payments) is almost always a prerequisite for PMI cancellation.
Example Scenario:
Let's say you bought a home for $375,000 with a $300,000 loan (80% LTV initially). Your monthly PMI payment is $150.
Original Loan Amount: $300,000
Original Home Value: $375,000
Current Loan Balance: $280,000
Current Home Value (estimated): $450,000
Monthly PMI Payment: $150
Using these numbers, the calculator would show:
Original LTV: 80.00%
Current LTV (based on original value): 74.67%
Current LTV (based on current value): 62.22%
Eligibility: You are eligible for PMI removal based on both the 80% and 78% original value thresholds, and also based on the 80% current value threshold.
Potential Annual Savings: $1,800
This example demonstrates how significant home appreciation can accelerate your ability to remove PMI and save money.
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if (currentLTVOriginalValue <= 78) {
eligibilityMessages.push('✔ You are eligible for Automatic PMI Termination (78% LTV of original value).');
} else if (currentLTVOriginalValue <= 80) {
eligibilityMessages.push('⚠ You are eligible to Request PMI Cancellation (80% LTV of original value). Contact your lender.');
} else {
eligibilityMessages.push('✖ Not yet eligible for PMI removal based on 80% or 78% of original home value.');
}
if (currentLTVCurrentValue !== null) {
if (currentLTVCurrentValue <= 75) {
eligibilityMessages.push('✔ You are likely eligible for Early PMI Cancellation based on current home value (75% LTV of current value). A new appraisal may be required.');
} else if (currentLTVCurrentValue <= 80) {
eligibilityMessages.push('⚠ You may be eligible for Early PMI Cancellation based on current home value (80% LTV of current value). A new appraisal may be required.');
} else {
eligibilityMessages.push('✖ Not yet eligible for early PMI removal based on current home value (above 80% LTV).');
}
} else {
eligibilityMessages.push('Provide Current Home Value to check eligibility based on appreciation.');
}
if (eligibilityMessages.length > 0) {
resultDiv.innerHTML += eligibilityMessages.join(");
}
resultDiv.innerHTML += 'Potential Annual Savings from PMI Removal: $' + potentialAnnualSavings.toFixed(2) + ";
resultDiv.innerHTML += 'Always confirm eligibility and process with your mortgage servicer.';
}