1. What Is PMI Removal?

Private Mortgage Insurance (PMI) is typically required when homebuyers make a down payment of less than 20%. PMI can be removed once the loan-to-value ratio reaches 78% of the original property value.

2. How PMI Removal Calculation Works

The calculation is based on the formula:

Where:

• LTV Ratio — Loan-to-Value ratio (percentage)
• Current Loan Balance — Remaining mortgage balance
• Original Property Value — Purchase price or original appraised value

Explanation: PMI is typically automatically terminated when the LTV ratio reaches 78% based on the original property value, assuming you're current on payments.

3. Importance of PMI Removal

Details: Removing PMI can save homeowners hundreds of dollars annually on their mortgage payments. Understanding when PMI can be removed helps homeowners plan for this financial milestone.

4. Using the Calculator

Tips: Enter your original loan amount, original property value, and current loan balance. The calculator will determine your current LTV ratio and whether PMI can be removed.

5. Frequently Asked Questions (FAQ)

Q1: Can PMI be removed before reaching 78% LTV?
A: Yes, you can request PMI removal once you reach 80% LTV, but automatic termination typically occurs at 78%.

Q2: Does property appreciation affect PMI removal?
A: For automatic termination, lenders use the original property value. However, you might qualify for early removal based on current value with a new appraisal.

Q3: Are there time requirements for PMI removal?
A: Most loans require at least 2 years of on-time payments before PMI can be removed based on current value.

Q4: What if I've made significant improvements to my home?
A: Home improvements that increase property value may help you reach the required LTV ratio sooner when using a current appraisal.

Q5: Is PMI removal automatic?
A: Lenders are required to automatically terminate PMI once you reach 78% LTV based on the original amortization schedule, but you may need to request removal if you've made extra payments.