PMI, Explained: When It Starts and When It Ends
Educational explainer, not financial advice — this page describes how private mortgage insurance works mechanically and what the federal Homeowners Protection Act says about ending it. Legal thresholds below are current as of September 2026 and can change over time; confirm specifics with your servicer and consumerfinance.gov.
Private mortgage insurance has a naming problem: it is insurance the borrower pays for, on the borrower's loan, that does not insure the borrower. That single fact explains most of how PMI behaves — why lenders require it, why it attaches to low-down-payment loans specifically, and why federal law had to step in to guarantee it eventually ends. This guide walks through the mechanics: what PMI insures, the three loan-to-value triggers written into the Homeowners Protection Act, the original-value fine print that trips people up, how FHA insurance differs, and how the down payment sets the whole clock in motion.
What PMI is — and whom it protects
PMI is a policy the lender takes out against the risk that a conventional loan defaults, with the premium passed to the borrower — most commonly as a monthly charge folded into the mortgage payment. If the loan fails, the insurer reimburses the lender's loss; the borrower receives nothing from the policy and still faces the ordinary consequences of default.
Why it exists is a matter of arithmetic on the lender's side. A loan against a home with a thin equity cushion leaves the lender exposed if the home must be sold after a default: sale costs and any price decline come out of a margin that barely exists. PMI transfers that tail risk to an insurer, which is what makes lenders willing to write conventional loans that start above 80% down at all. The borrower's benefit is real but indirect — earlier access to a loan — and it is priced into the monthly cost until the equity cushion is rebuilt.
The three triggers that end it
Before the federal Homeowners Protection Act, when PMI ended was largely up to the servicer. The federal Homeowners Protection Act changed that for borrower-paid PMI on single-family, primary-residence conventional loans, writing three triggers into law — all measured against the home's original value:
| Trigger | Threshold | What the Act requires |
|---|---|---|
| Borrower request | 80% LTV of original value | PMI can be cancelled at the borrower's written request, with a good payment history required |
| Automatic termination | 78% LTV of original value | PMI terminates automatically, provided the loan is current |
| Final backstop | Loan midpoint | PMI ends at the halfway point of the amortization schedule at the latest |
The 80% trigger requires action — a request the borrower initiates. The 78% trigger requires none: once the balance is scheduled to reach 78% of original value and the loan is current, PMI ends whether or not anyone asked. The midpoint backstop covers loan structures where the balance declines slowly, so that even then the insurance cannot outlive half the loan's term. How fast a balance actually falls is amortization arithmetic — early payments retire very little principal — and the mechanics are worked through in How Amortization Works.
"Original value" is the fine print that matters
Both percentage triggers point at the home's value at origination — generally the lesser of the purchase price and the original appraisal — not at what the home is worth today. A market that lifts the home's price does not move the statutory thresholds one dollar: the 78% automatic termination arrives on the amortization schedule's timetable regardless of appreciation.
Appreciation is not irrelevant — it is simply outside the statute. Many servicers will consider a cancellation request supported by evidence of current value, often with their own seasoning and appraisal requirements, but that path is servicer policy layered on top of the Act, and its terms vary. The federal floor is the original-value arithmetic; anything more generous comes from the servicer. The Consumer Financial Protection Bureau's explanations of both paths are at consumerfinance.gov.
FHA insurance follows different rules
None of the above applies to FHA loans. FHA mortgage insurance is a government program with its own premium structure and its own termination rules, and the headline difference is stark: for most FHA loans with less than 10% down, the annual mortgage insurance premium lasts for the life of the loan — there is no 78% trigger to wait for. Borrowers who want to shed FHA insurance typically do so by replacing the loan itself, which is a refinancing question with its own arithmetic. The current FHA rules are published at hud.gov; this page describes conventional PMI only.
How the down payment sets the clock
Everything above runs on loan-to-value, and the down payment fixes where LTV starts. The relationship is definitional: LTV is the loan divided by the home's value, so a down payment equal to one-fifth of the price starts the loan exactly at the 80% request threshold — which is why such loans are generally written without PMI at all. Any smaller down payment starts the loan above 80% LTV, and that gap to the statutory triggers must then be closed by principal payments (or, under servicer policy, by demonstrated appreciation).
The Down Payment Calculator turns a home price and a down-payment percent into the starting LTV directly, and the Mortgage Calculator shows the monthly payment each starting loan produces. Because PMI adds to the monthly housing cost while it lasts, it also feeds the affordability arithmetic — the Affordability Calculator shows how the total monthly housing payment compares against income-based guidelines.
Frequently asked questions
Does PMI protect me if I fall behind on payments?
No. Private mortgage insurance protects the lender against loss if the loan defaults. The borrower pays the premium, but the borrower is not the insured party — missing payments still leads to the ordinary consequences of default. What PMI does for a borrower is indirect: it lets lenders approve conventional loans that start above 80% LTV in the first place.
When can PMI be cancelled, and when does it end on its own?
Under the federal Homeowners Protection Act, borrower-paid PMI on a single-family, primary-residence conventional loan can be cancelled at the borrower’s written request once the balance reaches 80% of the home’s original value, provided the payment history is good. If no request is made, PMI terminates automatically at 78% of original value as long as the loan is current, and at the latest at the loan’s midpoint. Details are published by the CFPB at consumerfinance.gov.
Does a rise in my home’s market value count toward the federal thresholds?
Not toward the statutory ones. The Homeowners Protection Act measures 80% and 78% against the original value of the home — generally the lesser of the purchase price or the original appraisal — so later appreciation does not move those triggers. Servicers and investors may separately entertain cancellation requests based on current value, but that is policy on top of the law, and the terms come from the servicer, not the statute.
Is FHA mortgage insurance the same thing as PMI?
No. PMI is private insurance on conventional loans and follows the Homeowners Protection Act. FHA loans carry government mortgage insurance under different rules: for most FHA loans with less than 10% down, the annual mortgage insurance premium lasts for the life of the loan rather than ending at an equity threshold. The current FHA rules are published at hud.gov.
How does the down payment determine whether PMI applies?
The down payment sets the starting loan-to-value ratio: a down payment large enough to start the loan at 80% LTV — arithmetically, one dollar in five — begins at the level, the level at or below which conventional loans are generally made without PMI. A smaller down payment starts the loan above 80% LTV, and PMI typically applies until the balance works its way down to the statutory thresholds measured against original value.
Not financial advice: an educational explainer describing borrower-paid PMI on single-family, primary-residence conventional loans under the federal Homeowners Protection Act. Lender-paid PMI, investment properties, second homes, and loan-program variations follow different rules, and servicer policies differ. Thresholds stated are current as of September 2026; confirm your loan's specifics with your servicer, and see consumerfinance.gov for the official consumer guidance. This site is not affiliated with any government agency. See the methodology page.