By Justin Pierce (JP) | Branch Manager / Certified Mortgage Advisor
Gold Star Mortgage Financial Group | October 16, 2026A smaller down payment can leave more cash available after you get the keys. But if the loan includes mortgage insurance, does that extra monthly cost follow you for the entire mortgage?
Quick answer: Not necessarily. Many conventional loans allow private mortgage insurance, or PMI, to end without refinancing. FHA mortgage insurance follows different rules. Knowing which kind you have helps you plan beyond the first payment. [1, 2]
A recent update makes this worth a look
On September 16, 2026, Fannie Mae issued a policy change, effective immediately, allowing servicers to proactively contact borrowers who may qualify for mortgage insurance removal based on their home’s current value. Your servicer is the company that manages your mortgage payments. [3]
The change permits outreach; it does not automatically remove PMI or guarantee that a homeowner qualifies. Borrowers still need to meet the applicable requirements. If you receive a notice, contact your servicer through the phone number on your statement to discuss the next steps. [3]
First identify the insurance
PMI is commonly required on conventional loans with less than 20% down. It protects the lender if you fail to repay; it is not homeowners insurance or protection against a slow month in your business. The monthly premium appears in the Projected Payments section on page 1 of the Loan Estimate and Closing Disclosure. [4]
The two percentages that matter
For many borrower-paid PMI loans on single-family primary residences closed on or after July 29, 1999:
80%: You may request cancellation when the balance is scheduled to reach 80% of original value, or sooner through extra principal payments. Submit a written request. Conditions include good payment history, current payments, no second mortgage or other junior lien, and evidence the property has not lost value.
78%: PMI generally ends automatically on the date the balance is scheduled to reach 78% of original value, if payments are current. Rising home values do not trigger this scheduled termination. [1]
For purchases, original value generally means the lower of the purchase price or original appraisal. At a $400,000 original value, those balance thresholds are $320,000 and $312,000. This illustration is not a personalized cancellation date. Lender-paid insurance follows different rules. [1]
What if your home is worth more now
A separate current-value review may be available. Fannie Mae’s rules consider how long you have had the loan, the balance relative to the property’s current value, payment history, and a qualifying property valuation. Requirements differ by property type, and substantial improvements can affect eligibility. [5]
Ask your servicer which rules apply and how to obtain an approved valuation before paying for an appraisal yourself. A neighborhood sale or an online estimate can prompt a conversation; it is not confirmation that PMI can end.
FHA insurance works differently
For FHA loans with case numbers assigned on or after June 3, 2013, the recurring mortgage insurance premium generally lasts 11 years when the original loan-to-value ratio was 90% or less, and for the loan term when it was above 90%. Loan-to-value compares the loan amount with the property value. Paying the balance down to 80% does not apply the conventional PMI cancellation rule to these FHA loans. Older FHA loans have different rules. [2]
Make the decision fit your business
For an entrepreneur or freelancer, removing an eligible monthly expense can create room in the household budget. But sending a large lump sum toward the mortgage solely to eliminate PMI deserves a comparison: How much premium would disappear, and how much accessible cash would you give up?
My recommendation is to get the cancellation requirements first, then evaluate the payment benefit alongside money needed for uneven income, home repairs, and business obligations. Before considering a replacement loan, ask whether the existing mortgage already offers a removal path.
Subscribe to Beyond the Rate for practical homeownership insights, and call me for a mortgage strategy session to review how mortgage insurance fits your homebuying or ownership plan.
Which would you like explained next: requesting PMI removal or comparing mortgage insurance when buying? Share your choice in the comments, no private financial details needed.
Sources for the article[1] CFPB - When can I remove private mortgage insurance from my loan? Reviewed August 28, 2026; modified August 31, 2026.[2] HUD - Final Monthly MIP Payment Date Revised June 22, 2020; distinguishes FHA case numbers assigned before and on or after June 3, 2013.[3] Fannie Mae - Lender Letter LL-2026-07 Issued September 16, 2026; outreach policy effective immediately.[4] CFPB - What is private mortgage insurance? Reviewed August 28, 2023; modified December 21, 2023.[5] Fannie Mae - Termination of Conventional Mortgage Insurance B-8.1-04, dated May 15, 2019. Read with the September 16, 2026 letter, which supersedes the older restriction on current-value outreach.