What LTV Ratio Cancels PMI? The 80% and 78% Rules

If you are paying private mortgage insurance, the question that matters most is simple: what loan-to-value ratio do you need to make it stop? The federal law that governs this gives two specific numbers, and knowing them can help you understand when a request to your servicer becomes possible, instead of waiting for your lender to bring it up.

The two numbers that matter: 80% and 78%

The Homeowners Protection Act (HPA) sets two loan-to-value thresholds for most conventional mortgages with private mortgage insurance. At 80% LTV, a borrower has the right to ask their servicer to cancel PMI. At 78% LTV, the law requires the servicer to terminate PMI automatically, even if the borrower never asked.

Both thresholds are measured against the original property value, meaning the appraised value or sale price used when the loan closed, whichever was lower. The math is based on the loan's amortization schedule, so it assumes regular, on-time payments.

This is federal law, not a lender favor. The CFPB explains these rules in plain language, and the statute itself lives in the U.S. Code for anyone who wants to read the exact wording.

How LTV is actually calculated

Loan-to-value is the remaining loan balance divided by the home's value. As an illustration only: if an original loan was for a home valued at 200,000 dollars and the balance has paid down to 160,000 dollars, LTV is 80 percent (160,000 divided by 200,000).

For borrower-requested cancellation at 80%, the calculation typically uses original value, the same number used at closing. Some lenders will also consider current value if a home may have appreciated, but that is a lender option, not a federal requirement, and it usually involves an appraisal the borrower pays for.

For automatic termination at 78%, the HPA requires the calculation to use original value and the scheduled amortization date, meaning the date the balance is scheduled to hit 78% assuming payments as agreed. Extra principal payments can move that date earlier.

Reaching 80% is not automatic approval

Hitting 80% LTV opens the door to request cancellation, but a servicer can still ask for a few things before approving it. Under the HPA, borrowers generally need to be current on payments, have a good payment history (no payment 30 days or more late in the past 12 months, and no 60-day late payment in the past 24 months), and have no other liens on the property, like a second mortgage or home equity line, that would push combined LTV back above the threshold.

A servicer may also require written confirmation that the property value has not declined below the original value used at closing. In areas where home prices have fallen, this is worth checking before submitting a request.

Because these conditions vary slightly by servicer and loan type, it can help to walk through the specific numbers before sending anything in writing. The free PMI Cancellation Checker walks through loan balance, original value, and payment history in about three minutes and shows where things stand.

What happens at 78% if no one asked

If a borrower never requests cancellation, the HPA still requires automatic termination once the loan is scheduled to reach 78% of original value, as long as payments are current at that point. If payments are behind, termination happens once the account becomes current again.

There is also a backstop called final termination. For loans on a fixed schedule, PMI must terminate no later than the midpoint of the loan term (for example, the 15-year mark on a 30-year loan) if payments are current, regardless of LTV. This protects borrowers who paid extra toward principal in ways that do not neatly track a standard schedule, or whose loans carry different amortization patterns.

The CFPB's consumer guidance and HUD's servicing resources both describe these termination triggers in more detail, including how lenders are expected to notify borrowers.

Putting the number into a request

Once LTV is calculated and the payment history conditions are confirmed, the next step is typically a written request to the servicer. Federal rules do not require a specific form, but a dated letter that states the loan number, the calculated LTV, and the request creates a paper trail.

The free cancellation letter template gives wording servicers expect to see, and the complete PMI cancellation playbook walks through the full process, including what can happen if a servicer asks for an appraisal or pushes back on the numbers.

Keeping copies of anything sent and any response received is worth doing. If a servicer denies a request that meets the HPA's conditions, the CFPB accepts complaints related to mortgage servicing, and a record of correspondence becomes useful evidence.

Questions people ask

Does the 80% LTV rule use original home value or current value?
For a borrower-requested cancellation, the standard under the Homeowners Protection Act uses original value, the number from closing. Some lenders allow current value if a home may have appreciated, but that involves their own appraisal process and is not a federal requirement.

What if home value has gone down since purchase?
A servicer can decline a cancellation request if current value has fallen below original value, since that would push real LTV above 80 percent. This is one of the conditions servicers are permitted to check under the HPA.

Can reaching 78% or 80% LTV happen faster?
Extra principal payments lower the balance faster, which can move the scheduled dates for both thresholds earlier. Whether extra payments make sense for an individual's overall finances is a question for a financial professional, since this is not financial advice.

Does the 78% automatic termination apply to FHA loans?
No. The Homeowners Protection Act applies to conventional loans with private mortgage insurance. FHA loans carry a different type of mortgage insurance premium governed by HUD rules, with its own cancellation and duration terms.

Sources

1. CFPB: Owning a Home, mortgage and PMI resources
2. Homeowners Protection Act of 1998 (12 U.S.C. 4901 et seq.)
3. HUD: Mortgage Insurance Premiums and Servicing Guidance
4. Federal Reserve Consumer Compliance Handbook: Homeowners Protection Act

Educational content with sources linked above; not financial advice. Published July 11, 2026.