How to Remove PMI on a Conventional Loan, and Why Fannie Mae Now Lets Servicers Tell Borrowers When They May Qualify

Homeowners who want to remove PMI from a conventional loan can follow rules set by federal law and by the investor that owns the loan. Borrowers who take out a conventional mortgage with less than 20% down usually pay private mortgage insurance, a monthly charge that protects the lender, not the homeowner, if the loan goes unpaid, according to the Consumer Financial Protection Bureau. Unlike the annual premium on many Federal Housing Administration loans, which can last for the life of the mortgage, PMI on a conventional loan is designed to end, and federal law spells out when.

What did Fannie Mae change about PMI removal?

Fannie Mae made one part of that process easier to navigate in September 2026. In Lender Letter LL-2026-07, issued Sept. 16 at the direction of the Federal Housing Finance Agency, the company said it would permit servicers to proactively contact borrowers whose loans may be close to, or may already have reached, the loan-to-value levels needed to cancel mortgage insurance based on the current value of the home, and to explain the steps required. The change took effect immediately. Fannie Mae's servicing rules had previously barred servicers from soliciting those requests; removal based on current value could be considered only when a borrower asked on his or her own.

When can you remove PMI under federal law?

The baseline rules come from the Homeowners Protection Act and apply to single-family principal residences financed on or after July 29, 1999. A borrower has the right to ask the servicer to cancel PMI on the date the loan balance is scheduled to fall to 80% of the home's original value, or earlier if extra payments have brought the balance to that level, the CFPB says. The first eligible date should appear on the PMI disclosure the borrower received at closing. "Original value" generally means the lower of the purchase price or the appraised value at purchase, or the appraised value at the time of a refinance. To have the request granted, the borrower must ask in writing, be current with a good payment history, certify that there is no second mortgage or other junior lien, and, if required, show that the property has not lost value below its original value.

Removal also happens without a request. Servicers generally must terminate PMI automatically on the date the balance is scheduled to reach 78% of the original value, provided the borrower is current, and must end it the month after the loan reaches the midpoint of its amortization schedule, which is 15 years into a 30-year loan, even if the 78% mark has not been reached.

Can you remove PMI based on your home's current value?

Investors such as Fannie Mae and Freddie Mac may set their own standards as long as they are no less favorable to borrowers. Fannie Mae's servicing guide allows a borrower to request cancellation based on the home's current value, measured by a new valuation, rather than its original value. For a one-unit principal residence or second home, the loan-to-value ratio must be 75% or less if the loan is between two and five years old, or 80% or less if it is more than five years old. If the borrower has made improvements that substantially increased the home's value, such as kitchen or bathroom renovations or added square footage, the two-year waiting period can be waived with a loan-to-value ratio of 80% or less; routine repairs do not count. Two- to four-unit primary residences and investment properties must reach 70% or less and be more than two years old.

The current-value route depends on prices having risen since purchase, and that varies widely by when a borrower bought. Middle Tennessee's regional median sale price rose 2% in September from a year earlier to $444,169, according to Realtracs data compiled by Nashville broker Grant Hammond of Compass, a slower pace than earlier in the decade. Nationally, Intercontinental Exchange has reported that about 813,000 mortgage holders were underwater, up 44% from a year earlier and concentrated among FHA and VA borrowers and those who bought between 2022 and 2025. Owners who bought several years ago are more likely to clear the 75% or 80% thresholds on a new appraisal, while recent buyers will generally reach them through scheduled payments or extra principal.

What else affects a PMI cancellation request?

Several details apply to every case. The rules above cover borrower-paid PMI; when a lender pays the mortgage insurance in exchange for a higher interest rate, the CFPB notes that different rules apply. FHA and VA loans follow their own programs. And because the valuation, any appraisal fee and the documentation requirements are set by the servicer and the loan's investor, the PMI disclosure from closing and the servicer's written instructions are the starting points for any request.

Frequently asked questions

When does PMI come off automatically?

Servicers generally must end borrower-paid PMI on the date the balance is scheduled to reach 78% of the home's original value, provided the borrower is current, and must end it the month after the loan reaches the midpoint of its amortization schedule, which is 15 years into a 30-year loan.

Can I ask to remove PMI before it ends automatically?

Yes. A borrower can ask in writing to cancel PMI on the date the balance is scheduled to fall to 80% of the home's original value, or earlier if extra payments have brought it there, provided the borrower is current with a good payment history, has no second mortgage or other junior lien and, if required, shows the property has not lost value.

What loan-to-value does Fannie Mae require to remove PMI based on current value?

For a one-unit principal residence or second home, the loan-to-value ratio must be 75% or less if the loan is between two and five years old, or 80% or less if it is more than five years old.

Sources

• Fannie Mae, Lender Letter LL-2026-07, "Updates to Mortgage Insurance Termination Requirements" (Sept. 16, 2026): https://singlefamily.fanniemae.com/media/48106/display
• Fannie Mae Servicing Guide, B-8.1-04, Termination of Conventional Mortgage Insurance: https://servicing-guide.fanniemae.com/svc/b-8.1-04/termination-conventional-mortgage-insurance
• Consumer Financial Protection Bureau, "When can I remove private mortgage insurance (PMI) from my loan?": https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/
• Consumer Financial Protection Bureau, "What is private mortgage insurance?": https://www.consumerfinance.gov/ask-cfpb/what-is-private-mortgage-insurance-en-122/
• Grant Hammond, "Middle Tennessee Real Estate Market Update September 2026" (Realtracs MLS, report date Oct. 4, 2026): https://www.granthammond.com/market-analysis/nashville-housing-market/middle-tennessee-real-estate-market-update-september-2026/
• Intercontinental Exchange, "ICE Mortgage Monitor: Mortgage Holder Equity Climbs to Record $18 Trillion as Annual Home Price Growth Reaches 14-Month High" (August 2026 Mortgage Monitor, Aug. 10, 2026): https://mortgagetech.ice.com/resources/data-reports/august-2026-mortgage-monitor