Two paths to remove PMI, briefly:
- Don't refinance (conventional): at 80% LTV you can request PMI cancellation directly from your servicer. No refi needed. Free. This is usually the right answer.
- Refinance: required if you have an FHA loan (MIP doesn't drop off the way conventional PMI does for most FHA loans), or if you also want a better interest rate, or if your servicer is dragging their feet on the conventional cancellation.
The calculator below answers: does the refi pencil out when you factor in closing costs and the PMI you're currently bleeding every month?
FHA loan? Refi to a conventional loan is usually the only way out of FHA mortgage insurance (MIP) once you're past 11 years or had under 10% down at origination. For FHA-to-conventional, the math almost always works once you're at 20% equity.
How this works
The math accounts for what most refi calculators miss: the monthly PMI you're currently paying counts as savings when it goes away. So the "monthly savings" from a refi isn't just (old P&I − new P&I) — it's (old P&I + current PMI − new P&I). That changes the break-even significantly for borrowers with high PMI.
Formula: Break-even months = closing costs ÷ (current monthly outlay including PMI − new monthly P&I).
Plus lifetime interest delta = (total cur interest over remaining years + PMI you'd otherwise pay) − (total new interest + closing costs).
The honest verdict logic
- ✅ Refinance: break-even under 36 months, staying 5+ years, AND the new rate alone is at least 0.5% below current rate.
- ⚠️ Try direct cancellation first (conventional): if you have conventional PMI and the refi rate barely beats your current, request PMI cancellation from your servicer — free.
- ❌ Don't refinance: break-even over 60 months, OR the new payment is higher than current INCLUDING PMI.
The "don't refinance — just ask" path (for conventional PMI)
If you have a conventional loan, the Homeowners Protection Act gives you specific rights:
- Automatic termination at 78% LTV based on the original purchase price and the loan's amortization schedule. Servicer must terminate without you asking.
- Customer-requested cancellation at 80% LTV. You request it in writing. Servicer may require: current value via appraisal (paid by you, ~$500), good payment history (no 30+ day lates in last 12 months, no 60+ day lates in last 24 months), and confirmation the home hasn't lost value.
- Final termination at midpoint of amortization. Whichever comes first.
Send the cancellation request via certified mail. Save the receipt. If the servicer drags their feet beyond 60 days, escalate to the CFPB.
FAQ
Do I have to refinance to remove PMI?
If you have a conventional loan and reach 20% equity through payments or appreciation, you can request PMI cancellation directly from your servicer — no refinance needed. Per the Homeowners Protection Act of 1998, lenders must automatically terminate PMI at 78% LTV, and customer-requested cancellation is available at 80% LTV.
What about FHA mortgage insurance?
FHA MIP rules differ from conventional PMI. For FHA loans originated after June 3, 2013 with less than 10% down, MIP lasts the life of the loan — refinancing to a conventional is the only way out. With 10%+ down at origination, MIP drops off after 11 years.
How do I prove 20% equity for cancellation?
Your servicer typically requires a current appraisal you pay for (~$500). They use the lower of current appraised value or original purchase price. Reaching 80% LTV via principal payments alone (no appreciation needed) gives you automatic cancellation rights without needing the appraisal.
What if my servicer is dragging their feet?
File a written PMI cancellation request via certified mail. Cite the Homeowners Protection Act (12 USC §4901-4910). If they still resist or take more than 60 days, escalate to the CFPB complaint portal at consumerfinance.gov/complaint.
Should I refinance just to drop PMI?
Usually not — if you have a conventional loan, direct cancellation is free. Refinance solely for PMI is only worth it if your current servicer refuses to cooperate, OR you have an FHA loan you need to escape, OR you can lower your rate at the same time.
What about PMI on a home that has appreciated significantly?
Appreciation counts toward equity. If your home is worth 25% more than you paid, you're already past 80% LTV. Your servicer will require an appraisal, but they must cancel PMI once verified.