Does PMI really drop off at 20%? My lender is saying differently

Question

My primary is valued at $300,000 and we owe $215,000 on it. We bought it in 2014. We've been paying PMI with the understanding it automatically drops off once we hit the 20% mark. Well...$240,000 is the 20% mark and we're way past that with only owing $215,000. I call my lender to ask them to drop it and they said no - now it's 30% for the PMI to drop off, which is $210,000.

I've never heard of 30% for PMI to drop off. It's always 20%.

Any thoughts on this? Is this common?

I’ve never heard of 30% for PMI to drop off. It’s always 20%.

Any thoughts on this? Is this common?

Account Closed · Answer

@Joe Delgrosso I've always been told it automatically drops at 22% but you can submit a written request at 20% to have it removed. Request a pmi cancellation schedule and the terms of the loan. You can also refinance to have it removed and sounds like you should go to a different lender anyway.

Andrew B. · Answer

This is 100% dependent on your specific loan and contract. FHA loans keep PMI for the life of the mortgage. Some loans drop PMI at 20-25%. Some drop at more. Check your contract.

Anthony Wick · Answer

@Joe Delgrosso

What is your interest rate? You might consider refinancing with a different mortgage company.

Jeff Kobernus · Answer

It was my understanding you would have to refi out but I'm sure this is dependent upon the type of loan.  May want to speak to a couple different brokers to get their opinion and maybe they will compete for a no cost refi.

Joe Delgrosso · Answer

@Brit F.

This is great! I knew there was something like this out there and this is spot on!

Joe Delgrosso · Answer

@Suny Capezzuto

Thank you for taking the time to offer your experience and advice!

Joe Delgrosso · Answer

@John Teachout

Super.

Brit F. · Answer

@Joe Delgrosso, look up the Homeowner's Protection Act (HPA).  Here's some info on the CFPB website.  There are a some details in the fine print, such as HPA doesn't apply to FHA or VA loans, and your loan payments need to be in good standing.  In general, at 80% LTV, borrowers can request PMI removal.  At 78% LTV, lenders should automatically remove it.  Note that 'value' refers to the original value, not current value.

Hypothetically, presuming you & the loan meet HPA requirements and if your lender failed to remove PMI, submit a complaint to the CFPB and let them fight for you.

John Teachout · Answer

You have a contract? Read it.

Does PMI really drop off at 20%? My lender is saying differently

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