When can I cancel private mortgage insurance?

New York – Private mortgage insurance (PMI) provides insurance to the lender when a borrower does not pay off a mortgage. It is typically required when a borrower puts up less than 20 percent of a home’s purchase price. In general, PMI can be cancelled as follows:

  • Your loan agreement allows it – Review your loan agreement. Depending on state law, PMI may not be cancelable per your contract. You should contact your bank for a copy of your signed agreements if you did not retain one.
  • When you have 20% equity –   Make sure you know the current value of your house. If property prices in your neighborhood have risen, it may be possible to quickly reach the 20% equity level regardless of how much you originally put down. If so, contact your bank to determine an acceptable appraisal. Normally, you will have to pay the costs of the appraisal.

If you have changed your house to an investment property (rental income), be careful. The bank may consider your house an investment property and not a home. The standard for eliminating PMI on investment property is generally higher than on primary residences. Investment properties generally require PMI if equity stakes are lower than 35%.


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