Mortgage Insurance in 2026: What Cancels, What Doesn't

Mortgage insurance adds $100–$300+ to your monthly payment, but cancellation rules changed in 2026. Here's exactly when you can cancel PMI (conventional) and MIP (FHA), what the new requirements are, and how to get rid of this monthly expense.

Quick Summary

• Conventional PMI: Cancels automatically at 78% LTV, or you can request cancellation at 80% LTV (with conditions)
• FHA MIP: Cannot be cancelled for loans with <10% down (life of loan); can cancel after 11 years if ≥10% down
• 2026 changes: New appraisal requirements and documentation standards for PMI cancellation
• Key factor: Loan-to-value ratio (LTV) determines when you can cancel
• Action required: For conventional loans, you may need to request cancellation—it's not always automatic

Conventional PMI (Private Mortgage Insurance)

When PMI Cancels Automatically

PMI automatically cancels when:

• 78% LTV reached: Based on original purchase price or appraised value (whichever is lower)
• Midpoint of loan term: Reached the halfway point of your loan term
• Both conditions must be met: Not just one or the other

Important: This is based on your original loan amount and property value, not current value. Even if your home appreciated, you must reach 78% of the original value.

Requesting PMI Cancellation at 80% LTV

You can request PMI cancellation earlier (at 80% LTV) if:

• Current value supports it: Home has appreciated, bringing LTV to 80% or below
• Appraisal required: Lender will order an appraisal (you pay, typically $400–$600)
• Good payment history: No late payments in last 12–24 months (varies by lender)
• No second liens: No home equity loans or HELOCs that would affect LTV calculation

2026 requirement: New appraisal must show current value supports 80% LTV or below.

PMI Cancellation Process

1. Request cancellation: Contact your lender/servicer
2. Pay for appraisal: You'll pay for a new appraisal ($400–$600)
3. Lender reviews: Verifies LTV, payment history, and property condition
4. Cancellation approved: PMI removed from next month's payment

Timeline: Typically 30–45 days from request to cancellation.

When PMI Doesn't Cancel

PMI may not cancel if:

• High-risk loans: Some high-LTV loans (90%+) may have different terms
• Poor payment history: Late payments can delay cancellation
• Property condition: Significant property damage or code violations
• Second liens: Home equity loans can affect LTV calculations

FHA MIP (Mortgage Insurance Premium)

The Harsh Reality: MIP Rarely Cancels

For loans with <10% down:

• MIP is for life of loan: Cannot be cancelled, ever
• Upfront MIP: 1.75% of loan amount (financed into loan)
• Monthly MIP: 0.85% of loan amount annually (divided by 12 months)

For loans with ≥10% down:

• MIP cancels after 11 years: If you put 10%+ down, MIP cancels after 11 years
• Still have upfront MIP: 1.75% upfront MIP still applies
• Monthly MIP: 0.80% annually (slightly lower than <10% down)

Key point: Most FHA borrowers put <10% down, so MIP is permanent. The only way to remove it is to refinance to conventional.

Why FHA MIP Doesn't Cancel

• Higher risk: FHA loans have lower credit/DTI requirements
• Government program: MIP protects the FHA insurance fund
• Different structure: MIP is different from PMI (different risk pool)

Bottom line: If you have an FHA loan with <10% down, MIP won't cancel. You'll need to refinance to conventional to remove it.

2026 Changes & Requirements

New Appraisal Standards

• More detailed appraisals: Lenders may require more comprehensive appraisals for PMI cancellation
• Property condition review: Appraisers checking for deferred maintenance or issues
• Comparable sales: Stricter requirements for comparable sales used in valuation

Documentation Requirements

• Payment history: Typically need 12–24 months of on-time payments
• Property tax status: Must be current on property taxes
• Homeowners insurance: Must have active, adequate insurance
• No second liens: Home equity loans can complicate LTV calculations

Lender-Specific Policies

Different lenders have different policies:

• Some lenders: Very strict, require perfect payment history
• Other lenders: More flexible, may allow cancellation with minor issues
• Servicer matters: If your loan was sold, your servicer's policies apply

Pro tip: Check your loan documents and servicer's website for specific cancellation requirements.

Real-World Examples

Example 1: Conventional Loan with Appreciation

Original loan:

• Purchase price: $400,000
• Down payment: $40,000 (10%)
• Loan amount: $360,000
• Original LTV: 90%

5 years later:

• Home value: $500,000 (appreciated)
• Loan balance: $320,000
• Current LTV: 64% ($320k ÷ $500k)

Result: Can request PMI cancellation (well below 80% LTV). Pay for appraisal, get it removed.

Example 2: FHA Loan with <10% Down

Original loan:

• Purchase price: $300,000
• Down payment: $10,500 (3.5%)
• Loan amount: $289,500
• MIP: Permanent (life of loan)

10 years later:

• Home value: $450,000
• Loan balance: $250,000
• Current LTV: 56%

Result: MIP still required—cannot cancel. Must refinance to conventional to remove MIP.

Example 3: Conventional Loan Reaching 78% LTV

Original loan:

• Purchase price: $400,000
• Down payment: $40,000 (10%)
• Loan amount: $360,000
• Original LTV: 90%

15 years later (midpoint of 30-year loan):

• Loan balance: $280,000
• LTV: 70% ($280k ÷ $400k original value)

Result: PMI cancels automatically (reached 78% of original value + midpoint of loan term).

Strategies to Remove Mortgage Insurance

Strategy 1: Request Cancellation (Conventional)

• When: Reach 80% LTV based on current value
• Cost: Appraisal fee ($400–$600)
• Benefit: Remove PMI immediately
• Timeline: 30–45 days

Strategy 2: Refinance to Conventional (FHA)

• When: Have 20%+ equity and good credit (680+)
• Cost: Closing costs (2–5% of loan amount)
• Benefit: Remove MIP, potentially lower rate
• Consideration: Only makes sense if you'll save more than closing costs

Strategy 3: Make Extra Payments

• When: Want to reach 80% LTV faster
• Cost: Extra principal payments
• Benefit: Reach cancellation threshold sooner
• Calculation: Use amortization calculator to see impact

Strategy 4: Wait for Automatic Cancellation

• When: Close to 78% LTV and loan midpoint
• Cost: None (automatic)
• Benefit: No appraisal needed
• Timeline: May take longer than requesting cancellation

What To Do Next

1. Check your loan type — Know if you have PMI (conventional) or MIP (FHA)
2. Calculate your LTV — Determine current loan-to-value ratio
3. Review cancellation options — Understand when/how you can cancel
4. Talk with Harry — Get personalized guidance on removing mortgage insurance

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Quick FAQ

Can I cancel PMI if my home value increased?

Yes, for conventional loans. If your home appreciated and you're at 80% LTV based on current value, you can request cancellation (with a new appraisal). This doesn't work for FHA MIP.

How much does it cost to cancel PMI?

For conventional loans, you'll pay for a new appraisal ($400–$600). There's no fee to process the cancellation itself. For FHA loans, you'd need to refinance (closing costs apply).

What if my lender won't cancel PMI?

If you meet the requirements (80% LTV, good payment history) and your lender refuses, you can file a complaint with the CFPB or your state's banking regulator. However, make sure you actually meet all requirements first.

Can I remove PMI by refinancing?

Yes, but only if you refinance to a conventional loan with 20%+ equity. Refinancing an FHA loan to conventional is the only way to remove FHA MIP (if you had <10% down).

How do I calculate my current LTV?

Current LTV = (Current loan balance ÷ Current home value) × 100. You'll need a recent appraisal or estimate of your home's current value. Online estimates (Zillow, etc.) are rough guides but not official.

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Educational only; not a commitment to lend. Qualification and terms subject to credit, income, collateral, and underwriting approval. Equal Housing Lender. Rockhouse Mortgage, LLC. NMLS #2469785.