How to Remove PMI From Your FHA Loan

You can get rid of PMI on an FHA loan if you meet certain conditions. We’ll go over those requirements and how to remove PMI from your loan.

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What is PMI?

PMI or private mortgage insurance is required if you’re making a down payment of less than 20 percent on your home. This insurance protects the lender in case you default on your loan. PMI can be expensive, and you may be eager to get rid of it as soon as possible. Let’s take a look at how to remove PMI from your FHA loan.

What are the benefits of PMI?

Mortgage insurance protects the lender in case you default on your loan. … In exchange for this protection, mortgage insurance also allows borrowers to buy homes with as little as 3% down, and in some cases, no down payment at all. This can make homeownership more affordable for first-time homebuyers and others with limited resources.

How to Remove PMI From Your FHA Loan

If you have an FHA loan, you’re paying mortgage insurance (MI) each month. MI covers the lender’s risk if you default on the loan. You can avoid MI if you can prove to the lender that you have at least 20% equity in the home. You can do this by getting a new appraisal or by waiting for your home’s value to increase.

How to cancel PMI on a conventional loan

Private mortgage insurance, or PMI, protects your lender in case you default on your home loan. You pay for insurance, and the lender is protected if you stop making payments on your mortgage. After a while, typically when you reach 20% equity in your home, you can ask your lender to cancel the insurance. But there are other ways to get rid of PMI.

How to cancel PMI on an FHA loan

If you have a Federal Housing Administration (FHA) loan, you pay mortgage insurance premiums (MIP) to the US Department of Housing and Urban Development (HUD). MIP protects lenders from loss in the event that borrowers default on their loans, and it allows borrowers to purchase homes with as little as 3.5% down.

Fortunately, MIP is not permanent. You can cancel MIP on an FHA loan after 11 years if you put more than 10% down when you purchased your home, or if you put more than 5% down and have a loan term longer than 15 years.

To cancel MIP on an FHA loan, you will need to refinance your home. This process can be complex and expensive, so make sure that you are prepared before you begin.

The Bottom Line

You can remove PMI from your FHA loan once you have 22% equity in your home. You can do this by either making home improvements to increase the value of your home, or by paying down the principal balance of your loan.