PMI Removal Eligibility Calculator
Use this calculator to estimate if you are eligible to remove Private Mortgage Insurance (PMI) from your mortgage. PMI is typically required when your down payment is less than 20% of the home's purchase price, resulting in a Loan-to-Value (LTV) ratio greater than 80%.
Understanding Private Mortgage Insurance (PMI)
Private Mortgage Insurance (PMI) is a type of insurance policy that protects the lender in case 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. PMI is an additional cost added to your monthly mortgage payment, and while it protects the lender, it doesn't directly benefit the homeowner.
How to Remove PMI
There are several ways to get rid of PMI, potentially saving you a significant amount of money over the life of your loan. The Homeowners Protection Act (HPA) of 1998 provides guidelines for PMI cancellation and termination.
1. Automatic Termination (78% LTV of Original Value)
Your lender is legally required to automatically terminate PMI when your loan balance reaches 78% of the original value of your home. This is based on the original amortization schedule, meaning the schedule of payments you agreed to when you took out the loan. You must be current on your payments for this to occur.
2. Borrower-Requested Cancellation (80% LTV of Original Value)
You can request your lender to cancel PMI once your loan balance reaches 80% of the original value of your home. To qualify, you typically need to:
- Have a good payment history (no 30-day late payments in the last year, no 60-day late payments in the last two years).
- Have no junior liens (like a second mortgage or home equity line of credit) on the property.
- Your lender may require an appraisal to confirm that the property value has not declined below its original value.
3. High-Equity Cancellation (80% LTV of Current Value)
If your home's value has increased significantly since you purchased it, you might be able to cancel PMI sooner. If your current LTV (remaining loan balance divided by the current market value) reaches 80% or less, you can request cancellation. For this method:
- You will almost certainly need to pay for a new appraisal to establish the current market value of your home.
- Lenders often have seasoning requirements, meaning you must have owned the home for a certain period (e.g., at least two years, or five years if your LTV is between 75-80% based on the new appraisal).
- You must also meet the good payment history and no junior liens criteria.
4. Refinancing
Refinancing your mortgage can also be a way to eliminate PMI. If your new loan's LTV is 80% or less (based on the new appraisal), you won't be required to pay PMI on the new loan. However, refinancing comes with its own costs (closing costs, fees), so you'll need to weigh if the savings from eliminating PMI outweigh these expenses.
Important Considerations
- FHA Loans: FHA loans have different mortgage insurance rules (MIP – Mortgage Insurance Premium) that often cannot be removed unless you refinance into a conventional loan.
- Lender Specifics: While federal law provides guidelines, individual lenders may have slightly different procedures or additional requirements. Always contact your mortgage servicer to understand their specific process for PMI removal.
- Payment History: A consistent record of on-time payments is crucial for any PMI removal request.
PMI Removal Eligibility Results:
'; resultHTML += 'Remaining Loan Balance: $' + remainingBalance.toFixed(2) + "; resultHTML += 'Current LTV (based on Current Home Value): ' + currentLTV_currentValue.toFixed(2) + '%'; resultHTML += 'Current LTV (based on Original Home Value): ' + currentLTV_originalValue.toFixed(2) + '%'; resultHTML += ''; var eligible = false; if (currentLTV_originalValue <= 78) { resultHTML += '✔ Automatic Termination: Your loan balance has reached 78% of the original home value. Your lender is required to automatically terminate PMI, provided you are current on your payments.'; eligible = true; } else if (currentLTV_originalValue <= 80) { resultHTML += '✔ Borrower-Requested Cancellation (Original Value): Your loan balance has reached 80% of the original home value. You can request your lender to cancel PMI. You will need a good payment history and no junior liens. An appraisal may be required to confirm the home has not decreased in value.'; eligible = true; } else if (currentLTV_currentValue <= 80) { resultHTML += '✔ High-Equity Cancellation (Current Value): Based on your current home value, your LTV is below 80%. You may be able to request PMI cancellation. This typically requires a new appraisal to confirm the current value, a good payment history, no junior liens, and often a minimum ownership period (e.g., 2 years, or 5 years for LTV between 75-80%).'; eligible = true; } if (!eligible) { resultHTML += '✖ Not Yet Eligible: Based on the provided information, you are not yet eligible for PMI removal under the common criteria. Continue making payments or consider increasing your home\'s value.'; } resultHTML += 'Note: This calculator provides an estimate. Always contact your mortgage servicer to confirm your exact eligibility and the specific process for PMI removal.'; resultDiv.innerHTML = resultHTML; }