Yes, PMI may be canceled in certain circumstances.

Automatic Termination 
If you’re required to carry PMI, we’ll cancel it automatically when your loan-to-value (LTV) ratio is scheduled to reach 78%. The LTV ratio is the difference between the loan amount and the original market value of the home.

LTV Example: If you borrow $88,000 to buy a house valued at $100,000, your loan-to-value ratio is 88%. ($88,000 /$100,000 = 0.88, or 88%).

Based on the original home value, we’ll project the date when your LTV will reach 78%, and we’ll plan to cancel your PMI on that date.

Early Cancellation
You can request early cancellation of PMI before the automatic cancellation date. Each mortgage investor has different requirements for canceling PMI early.

• In most cases, the property must reach at least an 80% LTV. 
• If you obtained your loan less than two years ago, your investor may require a list of substantial improvements to evaluate the PMI cancellation request. You must have a description of the improvement, the date it occurred, and the associated cost.
• A home valuation may be required to determine your equity amount. The cost of the valuation will be your responsibility. We will let you know if a valuation is required along with the costs and steps to have the valuation completed.
• You must be current on your loan payments. You cannot have been more than 30 days past due in the last year or more than 60 days past due in the last two years.

PMI is a type of mortgage insurance. It is typically required on a conventional loan if the down payment is less than 20% of the home’s purchase price.

PMI may also be required to refinance if your equity is less than 20% of the value of your home.

Equity is the amount you have paid toward the loan principal through the down payment, your monthly payments, and additional payments to principal. Increases to your house’s market value can also increase your equity.

Mortgage insurance helps you to get a mortgage without having to make a substantial down payment. By paying a mortgage insurance premium, you can purchase a new home with less than 20% down. Mortgage insurance protects the mortgage investor if the account becomes past due. 
 
The most common types of mortgage insurance are private mortgage insurance (PMI) and insurance through the Federal Housing Administration (FHA), called a mortgage insurance premium (MIP).
 
If you are required to carry mortgage insurance, the insurance may be canceled when the equity in your home reaches a certain percentage.

Substantial improvements are changes to your home that increase the home’s value. For example:

• Significant structural alterations, including adding square footage
• Construction requiring permits
• Adding new features, such as a new bathroom, central air conditioning, etc.

 
Repairs and home maintenance are not considered substantial improvements. For example:

• New flooring
• New appliances
• Painting
• Replacing the roof or siding.

For any questions about your insurance policy information, please contact our Insurance Department at 1-888-882-1855. They are available Monday through Friday from 8:00 am to 9:00 pm ET and Saturday from 8:00 am to 5:00 pm ET.