Purchase · 4 min read
What is PMI, and when does it drop off?
July 13, 2026 · Written by Bill Egan, NMLS 7342
Short answer
Private mortgage insurance protects the lender when you put down less than 20 percent on a conventional loan. If you stay current, you can usually ask to cancel it when you reach 20 percent equity based on the original value, and it should fall off automatically at 22 percent. FHA insurance is a different product and often lasts for the life of the loan.
01
Why this comes up
You cannot put 20 percent down and you think PMI is throwing money away, or you already have it and nobody told you when it comes off. FHA insurance got mixed into the same worry.
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Where this goes wrong
FHA insurance is sold as PMI that “falls off.” It often does not. Or conventional PMI is never cancelled because nobody wrote the servicer at 80 percent. On the way in, the payment you qualified with omitted the insurance, and underwriting will not approve the house you are under contract on.
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What we do about it
On a conventional loan we explain cancellation at 20 percent of the original value if you stay current, and automatic drop-off at 22 percent. We will not call FHA insurance PMI. When you are choosing a product, we price conventional against FHA with the insurance included.
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How to get ready
If you already have conventional PMI, write the servicer when you hit 80 percent of the original value and keep the payment current. A new appraisal is a later conversation. If you are choosing a loan now, ask whether the insurance can ever come off. VA uses a funding fee instead of a monthly insurance bill.