When Does PMI Automatically Cancel by Law? The 78% Rule

TL;DR: Under the federal Homeowners Protection Act of 1998, private mortgage insurance must automatically terminate once your loan balance reaches 78% of the home's original value, based on the original amortization schedule, as long as you're current on payments. If you fall behind, cancellation can be delayed until you catch up. There's also a hard backstop: PMI must end at the midpoint of your loan term even if you haven't hit 78% yet.

_Last reviewed: August 2026 · 7 min read_

You've been paying PMI for years and you're not sure if your lender is tracking the cutoff correctly. Federal law actually spells out the exact numbers and dates, and you don't have to take your servicer's word for it.

Okoniq Property Hub helps homeowners log their loan balance and PMI start date so they can spot the 78% mark themselves instead of waiting for a servicer letter.

What law controls automatic PMI cancellation?

The Homeowners Protection Act (HPA) of 1998 is the federal law that governs PMI cancellation on conventional loans closed after July 29, 1999. It sets two paths off PMI: borrower-requested cancellation at 80% of original value, and automatic termination at 78%.

The 78% threshold is calculated against the home's original value, meaning the lesser of the purchase price or the appraised value at closing, not current market value. Your servicer runs this off the original amortization schedule for your loan, not your actual balance if you've made extra payments, unless you've specifically asked for early cancellation based on current equity. For background on how the whole system works before you get to cancellation, How PMI Works and When It Drops covers the mechanics from day one.

This law only applies to conventional loans. FHA loans have a separate mortgage insurance premium (MIP) structure that in many cases never cancels automatically, especially on loans originated after June 2013 with less than 10% down.

What has to happen for the 78% rule to actually trigger?

Two conditions have to be met at the same time: your balance has to hit 78% of original value, and you have to be current on your payments. If you're late on a payment when the 78% mark arrives, the servicer can legally push cancellation until you're current again, and in some cases they'll wait until you have a clean 12-month payment history.

Servicers are required to notify you in writing when you're approved for a PMI cancellation, or send an annual disclosure telling you your rights under HPA if you haven't cancelled yet. If you never get that notice, you can request it directly, and federal law entitles you to a written explanation.

One thing that trips people up: extra principal payments don't accelerate the automatic 78% date unless you specifically request early cancellation. The servicer's system runs off the scheduled amortization curve. If you've been making extra payments, check your amortization schedule against your actual balance, because you may already be past 78% on paper even though the servicer hasn't caught up.

Is there a difference between automatic cancellation and requesting it early?

Yes, and the difference is worth real money. Automatic cancellation at 78% requires no action from you but happens on the lender's original schedule. Requesting cancellation at 80% requires you to ask in writing, and the lender can require a current appraisal (usually $300-$600) and proof of good payment history, plus no second mortgage or subordinate lien.

| Automatic Termination | Borrower-Requested Cancellation | |---|---| | Triggers at 78% of original value | Triggers at 80% of original value | | No action needed from borrower | Must submit written request | | Based on original amortization schedule | Can use current value if home appreciated | | Requires current payment status | May require appraisal + good payment history |

If your home's value has jumped, requesting early cancellation based on a new appraisal can get you off PMI years sooner than waiting for the 78% automatic date. This is often the faster route, and How to Remove PMI Faster walks through the appraisal-based path in detail.

Is there a hard deadline even if I never hit 78%?

Yes. HPA sets a final termination date at the midpoint of your loan's amortization period, regardless of your loan-to-value ratio. On a standard 30-year loan, that's the 15-year mark, or 180 payments in. This applies even if extra payments never happened and your balance technically hasn't reached 78% yet, as long as you're current on payments at that point.

This backstop matters most for buyers who made a small down payment (say 3-5%) and never paid extra. Even in a flat or declining market, PMI still has to go away at that midpoint. Check your loan documents or mortgage statement for your original loan term and count forward from your first payment date to find your exact midpoint deadline.

What if my loan is considered "high-risk" or I have a second mortgage?

High-risk loans get different rules under HPA, and lenders can require actual payment history instead of just hitting the balance threshold. A loan may be classified high-risk based on credit score at origination or loan type, and in those cases the automatic termination date can be pushed to when the balance reaches 77% instead of 78%, with a longer good-payment-history requirement.

A second mortgage or HELOC on the property can also complicate cancellation eligibility for the borrower-requested 80% path, since lenders typically require no subordinate liens for early cancellation. If you're weighing a HELOC against other equity options, factor in that it can delay your PMI removal timeline until it's paid off or subordinated.

FAQ

Does PMI automatically cancel at 20% equity?

No. The federal automatic termination threshold is 78% loan-to-value (meaning 22% equity), not 20%. The 80% LTV (20% equity) mark is only for borrower-requested cancellation, which requires you to submit a written request.

Can my lender refuse to cancel PMI at 78%?

Not if you're current on payments and meet the criteria under the Homeowners Protection Act, since automatic termination at 78% is a legal requirement, not optional. If a servicer refuses despite you meeting the terms, you can file a complaint with the Consumer Financial Protection Bureau.

Does refinancing reset my PMI cancellation clock?

Yes. A refinance creates a new loan with a new original value and a new amortization schedule, so your 78% and midpoint calculations start over from the new loan's closing date and balance.

How do I find my home's original value for the 78% calculation?

It's the lesser of your purchase price or the appraised value at the time you closed, listed on your original loan documents or Closing Disclosure. It is not your current market value or a recent appraisal unless you're requesting early cancellation.

Does PMI cancellation apply to FHA loans the same way?

No. FHA loans use MIP, governed by different rules, and on loans with less than 10% down originated after June 2013, MIP typically lasts for the life of the loan. FHA borrowers usually need to refinance into a conventional loan to remove mortgage insurance.

This is educational information, not financial advice. Talk to your loan servicer or a HUD-approved housing counselor to confirm your specific PMI cancellation dates and eligibility.