PMI Removal Calculator
Mortgage insurance protects the lender, not you. It comes off when the loan is small enough relative to the property — but only automatically at 78%, and asking at 80% is usually years earlier.
Insurance until
34months in
- Loan to value now
- 90.0%
- Insurance a month
- $150.00
- Ask at 80%
- 2 years 10 months
- Automatic at 78%
- 9 years 1 month
- Paid by then
- $5,100.00
- Asking as soon as you reach 80% saves $11,250.00 of premiums over waiting for the automatic cancellation, which ignores the rise in value entirely.
- Insurance protects the lender, not you. It is a cost you carry for their benefit and it stops the moment the loan is small enough relative to the property.
- Cancellation at 80% is on request and may need a valuation you pay for. Cancellation at 78% is automatic, on the original schedule, and takes no account of the property having risen in value — which is why asking is worth doing.
About mortgage insurance removal
If you put down less than twenty per cent, the lender normally requires insurance against you defaulting. You pay for it; it covers them. It is a real monthly cost — $150 a month on a $300,000 loan at 0.6% — that buys you nothing you keep.
There are two thresholds and the difference between them is the useful part of this page. At 80% loan-to-value you may request cancellation. At 78% it must be cancelled automatically. Those sound close together, and on the numbers they are not: the automatic rule is measured against the property's original value and takes no account of it having risen since.
On a 90% loan at 6.5% with the property appreciating 3% a year, you reach 80% on a current valuation after two years and ten months. Waiting for the automatic cancellation at 78% of the original value takes nine years and one month. Asking is worth roughly $11,000 of premiums, and nobody will prompt you to do it.
Requesting normally means paying for a valuation and having a clean payment record. That is a couple of hundred pounds against several thousand — worth doing as soon as the numbers get close, and worth checking annually if the local market is moving.
One thing this does not cover: on some government-backed loans the insurance runs for the life of the loan regardless of equity, and the only way out is to refinance into a conventional one. Check which kind you have before planning around these dates.
What it works out
- What the insurance costs each month and in total
- When you can request cancellation at 80%
- When it must cancel automatically at 78%
- What rising property value does to the first date and not the second
The formula
Loan to value = Balance ÷ Property value × 100 Cancel on request at 80%, automatically at 78%
Loan-to-value is the balance divided by what the property is worth. It falls from two directions: the balance goes down as you repay, and the value goes up if the market rises.
That is where the two thresholds diverge. The automatic cancellation at 78% is measured against the original value — the price you paid — and follows the amortization schedule regardless of what has happened to the market. Only the balance moves it.
The request at 80% can use a current valuation, so both the falling balance and the rising value count. With 3% annual appreciation on this loan, that is month 34 against month 109 for the automatic route.
Insurance at 0.6% a year on $300,000 is $1,800 a year, or $150 a month. The seventy-five month gap between the two dates is therefore worth about $11,250, for the cost of asking and a valuation fee.
- Balance
- What is still owed, falling with each payment.
- Property value
- The current value for a request at 80%; the original value for the automatic 78%.
- Insurance rate
- An annual percentage of the loan, typically 0.3% to 1.5% depending on deposit and credit.
- Property growth
- Annual appreciation. It moves the request date and not the automatic one.
A worked example
A $300,000 loan on a $333,333 property — 90% loan-to-value — at 6.5%, insured at 0.6% a year, with the property rising 3% a year.
That works out to 34 months in.
- Loan to value now
- 90.0%
- Insurance a month
- $150.00
- Ask at 80%
- 2 years 10 months
- Automatic at 78%
- 9 years 1 month
- Paid by then
- $5,100.00
Questions
When can I remove PMI?
You can request cancellation at 80% loan-to-value and it must cancel automatically at 78%. On these figures that is two years and ten months against nine years and one month, because the request can use a current valuation and the automatic rule cannot.
How much does mortgage insurance cost?
Usually 0.3% to 1.5% of the loan a year, depending on your deposit and credit standing. At 0.6% on $300,000 that is $150 a month.
Does my house going up in value help?
Only if you ask. The automatic cancellation at 78% is measured against the original purchase value and ignores appreciation entirely. A request at 80% can use a fresh valuation, which is why asking is worth thousands here.
How do I request cancellation?
In writing to the servicer. They will normally want a current valuation, which you pay for, and a clean payment history. A couple of hundred pounds against several thousand of premiums is a straightforward trade.
Will anyone tell me when I reach 80%?
No. The automatic cancellation happens without you, but it is the later and more expensive one. Nothing prompts you at 80% — that is yours to track, which is what this page is for.
Can I get rid of it by making extra payments?
Yes, and it is one of the better arguments for overpaying early. Every extra payment brings the threshold forward, and the insurance you stop paying is a return on top of the interest you save.
Does FHA mortgage insurance work the same way?
No. On most government-backed loans the insurance runs for the life of the loan whatever your equity, and the only way out is refinancing into a conventional mortgage. Check which type you have before planning around these dates.
Is mortgage insurance ever worth having?
It is the price of buying with a small deposit, so the real comparison is against waiting years to save twenty per cent while prices move. Sometimes it is clearly worth it. It is never worth paying a month longer than you have to.