PMI Freedom Calculator
Use this calculator to determine when you might be eligible to remove Private Mortgage Insurance (PMI) from your mortgage, either by homeowner request or automatic termination.
Your PMI Status Overview:
"); resultMessages.push("Current Equity (based on Original Purchase Price): " + originalEquityPercentage.toFixed(2) + "%"); resultMessages.push("Current Equity (based on Current Property Value): " + currentEquityPercentage.toFixed(2) + "%"); resultMessages.push("Current Loan-to-Value (LTV) (based on Original Purchase Price): " + originalLTV.toFixed(2) + "%"); resultMessages.push("Current Loan-to-Value (LTV) (based on Current Property Value): " + currentLTV.toFixed(2) + "%"); resultMessages.push(""); // Check for Automatic Termination (Homeowners Protection Act of 1998 – HPA) if (originalLTV <= 78) { resultMessages.push("✔ Automatic Termination: Your PMI should automatically terminate as your loan balance has reached 78% of the original purchase price. Contact your servicer if it hasn't been removed."); } else { resultMessages.push("✖ Automatic Termination: Your loan balance has not yet reached the 78% LTV threshold for automatic PMI termination based on the original purchase price. (Current LTV: " + originalLTV.toFixed(2) + "%)."); } // Check for Homeowner-Requested Cancellation (20% Equity) if (yearsSinceOrigination >= 2) { if (originalEquityPercentage >= 20) { resultMessages.push("✔ Homeowner-Requested Cancellation (Original Value): You may be able to request PMI cancellation based on 20% equity relative to your original purchase price. (Current equity: " + originalEquityPercentage.toFixed(2) + "%)."); } else { resultMessages.push("✖ Homeowner-Requested Cancellation (Original Value): You do not yet have 20% equity based on your original purchase price to request cancellation. (Current equity: " + originalEquityPercentage.toFixed(2) + "%)."); } if (currentEquityPercentage >= 20) { resultMessages.push("✔ Homeowner-Requested Cancellation (Current Value): You may be able to request PMI cancellation based on 20% equity relative to your current property value. (Lender may require a new appraisal to confirm value). (Current equity: " + currentEquityPercentage.toFixed(2) + "%)."); } else { resultMessages.push("✖ Homeowner-Requested Cancellation (Current Value): You do not yet have 20% equity based on your current property value to request cancellation. (Current equity: " + currentEquityPercentage.toFixed(2) + "%)."); } } else { resultMessages.push("✖ Homeowner-Requested Cancellation: You generally need to have had your mortgage for at least two years to request PMI cancellation, regardless of equity. (Years since origination: " + yearsSinceOrigination + ")."); } resultMessages.push("
Note: These are general guidelines. Always contact your mortgage servicer to understand their specific requirements for PMI cancellation or termination."); resultDiv.innerHTML = resultMessages.join("); }
Understanding and Eliminating Private Mortgage Insurance (PMI)
Private Mortgage Insurance (PMI) is an insurance policy that protects your mortgage lender if you default on your loan. It's typically required if you make a down payment of less than 20% of the home's purchase price. While it protects the lender, it adds an extra cost to your monthly mortgage payment without directly benefiting you as the homeowner.
Why is PMI Required?
Lenders consider loans with less than 20% equity to be riskier. PMI mitigates this risk for them. It's a common feature of conventional loans, but it's important to distinguish it from other types of mortgage insurance, such as FHA mortgage insurance premiums (MIP), which have different rules for cancellation.
How to Get Rid of PMI: Two Main Paths
The good news is that PMI isn't forever. There are generally two primary ways to eliminate it:
1. Homeowner-Requested Cancellation
You can proactively request your mortgage servicer to cancel PMI once you meet certain criteria. The Homeowners Protection Act (HPA) of 1998 outlines these rights:
- 20% Equity: You must have accumulated at least 20% equity in your home. This equity can be based on either the original appraised value of your home or, in some cases, its current market value. If you're relying on current market value, your lender will likely require a new appraisal, which you'll typically pay for.
- Good Payment History: Your loan must be current, meaning you haven't made any late payments (usually defined as 30 days or more past due) in the last 12 months, and no 60-day late payments in the last 24 months.
- Time Requirement: While not always a strict rule for all lenders, many require that at least two years have passed since your mortgage originated before you can request cancellation.
- No Junior Liens: You generally cannot have any junior liens (like a second mortgage or home equity line of credit) on the property.
To request cancellation, you'll need to contact your mortgage servicer directly. They will provide you with the specific forms and requirements.
2. Automatic Termination
The HPA also mandates that PMI must automatically terminate once your loan balance reaches a certain threshold, regardless of whether you request it. This provides a safety net for homeowners:
- 78% Loan-to-Value (LTV): Your PMI must automatically terminate when your loan balance reaches 78% of the original appraised value of your home. This calculation is based on the original amortization schedule, meaning it doesn't account for any extra payments you might have made.
- Loan Must Be Current: Similar to homeowner-requested cancellation, your loan must be current on payments for automatic termination to occur.
- Midpoint of Loan: In some rare cases, if the 78% LTV threshold hasn't been met, PMI must terminate by the midpoint of your loan's amortization period (e.g., after 15 years on a 30-year mortgage), provided you are current on payments.
Your mortgage servicer is responsible for tracking your loan balance and terminating PMI automatically when the 78% LTV threshold is met. They should notify you when this occurs.
Factors Affecting PMI Removal
- Home Value Appreciation: If your home's value has increased significantly since you purchased it, you might reach the 20% equity threshold faster when calculated against the current market value.
- Extra Payments: Making extra principal payments can accelerate your equity growth, helping you reach the 20% equity or 78% LTV thresholds sooner.
- Loan Type: This calculator focuses on conventional loans. FHA loans, VA loans, and USDA loans have different rules regarding mortgage insurance.
- Lender Specifics: While the HPA sets federal guidelines, individual lenders may have slightly different procedures or additional requirements. Always confirm with your specific mortgage servicer.
Using the Calculator
Our PMI Freedom Calculator helps you estimate your current equity and LTV ratios based on both your original purchase price and current property value. By inputting your mortgage details, you can get an indication of whether you're nearing eligibility for PMI cancellation or automatic termination. Remember, this tool provides estimates, and your mortgage servicer is the definitive source for your PMI status.