# Refinancing to remove PMI or FHA mortgage insurance

> Most conventional borrowers can cancel PMI without refinancing. FHA MIP is different — the rules, and when refinancing FHA to conventional pays off.

URL: https://mortgage-math-us.com/refinancing/refinance-to-remove-pmi/  
Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team

## Quick answer

On a conventional loan you usually don’t need to refinance to drop PMI: you can ask your servicer to cancel it once your balance reaches 80% of the home’s original value, and it ends automatically at 78%. FHA mortgage insurance is different — with a starting loan-to-value above 90%, annual MIP (0.55% a year on a typical 30-year loan with the minimum down payment) lasts for the life of the loan, so refinancing into a conventional loan with at least 20% equity is the usual way out. It pays when the MIP you drop outweighs the closing costs and any rise in your rate.

## Key facts

| Fact | Value | Source | As of |
|---|---|---|---|
| Request PMI cancellation at (share of original value) | 80% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) | Oct 28, 2026 |
| PMI ends automatically at | 78% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) | Oct 28, 2026 |
| Fannie Mae current-value cancellation, loan 2–5 years old | 75% | [Fannie Mae Servicing Guide B-8.1-04](https://servicing-guide.fanniemae.com/svc/b-8.1-04/termination-conventional-mortgage-insurance) | May 15, 2019 |
| Fannie Mae current-value cancellation, loan over 5 years old | 80% | [Fannie Mae Servicing Guide B-8.1-04](https://servicing-guide.fanniemae.com/svc/b-8.1-04/termination-conventional-mortgage-insurance) | May 15, 2019 |
| FHA MIP stops after 11 years only if the starting LTV was at or below | 90% | [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) | Feb 22, 2023 |
| FHA annual MIP, 30-year loan, under 5% down | 0.55% | [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) | Feb 22, 2023 |

## Conventional loans: try cancelling PMI first

Private mortgage insurance on a conventional loan has an end date built in. Under the federal rules the CFPB describes, you have three routes that cost nothing but a letter:

- **Ask at 80%.** You can request cancellation in writing once your balance is scheduled to reach 80% of the original value — or sooner, if extra payments get you there. You need a good payment history, no second mortgage, and possibly an appraisal showing the value hasn’t fallen.
- **Automatic at 78%.** If you are current, the servicer must end PMI when the balance is scheduled to hit 78% of original value.
- **At the midpoint.** PMI must end the month after the loan reaches the midpoint of its schedule — after 15 years on a 30-year loan — even if the balance is higher.

“Original value” is generally the lower of the purchase price and the appraisal when you bought. If your home has risen in value since, there may be a fourth route. Fannie Mae, for example, lets servicers cancel PMI based on current value when the loan is at least 2 years old: at 75% or less of today’s value for loans two to five years old, and 80% or less after five years. You need a clean recent payment record, the servicer orders the valuation, and the request has to come from you. If another investor owns your loan, ask your servicer for its rules.

> **Worked example: What a refinance costs next to PMI, on a $300,000 loan**
>
> | | Amount |
> |---|---:|
> | PMI at the midpoint of Freddie Mac’s typical range | $150 a month |
> | Refinance costs at 3% of the loan | $9,000 |
> | Months of PMI those costs would buy | about 60 |
> 
> Freddie Mac puts typical PMI at $30–$70 per $100k a month; your rate depends on your credit and down payment.

In other words, refinancing only to drop PMI spends roughly 60 months of premiums up front. It makes sense only when the new loan also brings a better rate, or when you are years away from any of the cancellation routes above. Our [PMI guide](https://mortgage-math-us.com/buying/pmi/) covers the rules in more detail.

## FHA loans: why MIP usually takes a refinance

FHA’s annual mortgage insurance premium doesn’t follow the PMI rules. For loans under HUD’s current rules, how long you pay depends on your loan-to-value at the start:

*How long FHA annual MIP lasts (HUD Mortgagee Letter 2023-05, terms over 15 years, base loans up to the high-balance threshold)*

| Down payment | Annual MIP | How long it lasts |
|---|---:|---|
| Under 5% | 0.55% | Life of the loan |
| 5% to under 10% | 0.5% | Life of the loan |
| 10% or more (starting LTV 90% or less) | 0.5% | 11 years |

Older FHA loans may follow earlier rules depending on when they were endorsed; your servicer can tell you which apply. Building equity doesn’t end MIP on its own, and an [FHA Streamline](https://mortgage-math-us.com/refinancing/streamline-refinance/) won’t help, because the new loan is FHA-insured too. The way out is a conventional refinance — ideally at 80% of value or less, so the new loan has no PMI at all.

## When refinancing FHA to conventional pays

The payoff depends mostly on how your current rate compares with today’s.

> **Worked example: $300,000 FHA balance, 26 years left, home now worth $400,000 (75% LTV) — new 25-year conventional loan at 7.24%, no PMI, $9,000 of costs**
>
> | Current FHA rate | Current P&I + MIP | New P&I | Monthly change | Simple break-even |
> |---|---:|---:|---:|---:|
> | 8.24% (one point above today’s average) | $2,474 | $2,166 | −$307 | 2 years 6 months |
> | 7.24% (equal to today’s average) | $2,275 | $2,166 | −$108 | 7 years |
> | 6.24% (one point below today’s average) | $2,083 | $2,166 | +$83 | never — payment rises |
> 
> MIP is approximated at 0.55% a year of the current balance. The new rate is this week’s Freddie Mac average, used for illustration; conventional pricing depends on your credit score. A 25-year term keeps the comparison close to the 26 years you have left.

If your FHA rate is above today’s, dropping MIP and the rate together pays back quickly. At today’s rate, the MIP saving alone takes years to cover the costs. If your rate is well below today’s, a refinance trades cheap money for expensive money, and the MIP saving can vanish entirely. In that case, paying down principal or waiting may cost less — and if you started with 10% or more down, MIP ends after 11 years anyway. Compare the months of MIP you have left with the [break-even point](https://mortgage-math-us.com/refinancing/break-even/) of the refinance.

> **Tip: Check the appraisal first**
>
> A conventional refinance with no PMI needs the new loan at or below 80% of the appraised value. If the appraisal comes in low, you could end up with PMI on the new loan — though, unlike FHA MIP, it can later be cancelled.

## Steps to take

**How to drop mortgage insurance**

1. **Find your loan type and original value** on your Closing Disclosure or PMI disclosure.
2. **Conventional:** check when your balance reaches 80% of original value and write to your servicer; ask whether current-value cancellation is available.
3. **FHA:** check your starting loan-to-value to see whether MIP ends after 11 years or lasts for the loan’s life.
4. **If refinancing:** estimate your value, get Loan Estimates, and compare the saving with the costs using the [break-even calculator](https://mortgage-math-us.com/tools/refinance-break-even-calculator/).

## Frequently asked questions

### Can I remove PMI without refinancing?

Usually, yes. Ask your servicer in writing once your balance reaches 80% of the original value; it ends automatically at 78% if you are current. Some investors, including Fannie Mae, also allow cancellation based on today’s value.

### Can I use my home’s current value to cancel PMI?

Sometimes. Fannie Mae allows it on loans at least 2 years old: 75% loan-to-value or less for loans two to five years old, 80% or less after five years, with a clean payment record and a valuation ordered by the servicer.

### Does FHA mortgage insurance ever go away?

Under HUD’s current rules, only if your starting loan-to-value was 90% or less, in which case annual MIP ends after 11 years. Otherwise it lasts for the life of the loan, and refinancing into a conventional loan is the usual way to drop it.

### Does an FHA Streamline remove MIP?

No. The new loan is still FHA-insured, with upfront and annual MIP. To drop MIP you need a conventional (or other non-FHA) loan.

### How much equity do I need to refinance without PMI?

At least 20% on a conventional loan, meaning the new loan is 80% of the appraised value or less. Closing costs rolled into the loan count toward that limit.

### Is it worth refinancing just to get rid of PMI?

Rarely on a conventional loan. In our example, $9,000 of refinance costs equals about 60 months of PMI at $150 a month — and cancellation through your servicer is free. It can pay for FHA loans, when MIP would otherwise last for the life of the loan and your rate isn’t far below today’s.

## Sources

- [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026)
- [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) — Typical refinance closing costs, low end (share of loan principal) (Oct 28, 2026)
- [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) — FHA annual MIP, 30-year loan, more than 95% LTV; FHA annual MIP ends after 11 years when the starting LTV is at or below; FHA annual MIP, 30-year loan, 95% LTV or less (Feb 22, 2023)
- [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026)
- [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) — Ask your servicer to cancel PMI at this share of original value; PMI ends automatically at this share of original value; PMI must end the month after the loan reaches the midpoint of its schedule (Oct 28, 2026)
- [Fannie Mae Servicing Guide B-8.1-04](https://servicing-guide.fanniemae.com/svc/b-8.1-04/termination-conventional-mortgage-insurance) — Fannie Mae: PMI cancellation on current value needs the loan to be at least; Fannie Mae: PMI cancellation on current value, loan two to five years old, LTV at or below; Fannie Mae: PMI cancellation on current value, loan over five years old, LTV at or below (May 15, 2019)
- [CFPB: When can I remove PMI from my loan?](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/)
- [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)
- [HUD Mortgagee Letter 2023-05: Reduction of FHA annual MIP](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf)
- [HUD: FHA fact sheet](https://www.hud.gov/hud-partners/housing-fha-fact-sheet)

_General information, not financial advice._