Before anything else: is your current interest rate higher or lower than today's market rate?
If your rate is lower than today's — which describes nearly everyone who closed between 2020 and 2022 — refinancing to remove PMI will almost certainly raise your total payment, even after the PMI disappears. You would be paying more in interest, forever, to stop paying insurance you can cancel with a letter.
If your rate is meaningfully higher than today's, a refinance may be worth running the numbers on, because you'd be capturing two benefits at once.
| Your situation | Better move | Typical cost |
|---|---|---|
| Conventional loan, rate at or below market | Cancel in writing | $0 – $600 |
| Conventional loan, rate well above market | Consider refinancing | 2% – 5% of loan |
| FHA loan, <10% down, post-2013 | Refinance is the only exit | 2% – 5% of loan |
| Lender-paid PMI (LPMI) | Refinance or pay off | 2% – 5% of loan |
The Homeowners Protection Act gives you the right to request cancellation once your balance reaches 80% of the home's original value, and servicing guidelines let you cancel based on your home's current value after appreciation — 75% LTV if the loan is 2–5 years old, 80% if older.
That path costs nothing on the original-value route, or the price of a broker price opinion or appraisal on the current-value route — roughly $150 to $600. A refinance costs 2% to 5% of the loan balance in closing costs. On a $350,000 loan that's $7,000 to $17,500, against maybe $400 for a valuation.
And critically: cancelling doesn't touch your interest rate, your term, or restart your amortization.
FHA loans. If you have an FHA loan originated after June 2013 with less than 10% down, your mortgage insurance premium lasts the life of the loan — there is no cancellation right, no threshold to reach, no letter that works. Once you have roughly 20% equity, refinancing into a conventional loan without mortgage insurance is the only way out.
For those borrowers, the refi math is genuinely different: you're not just chasing a rate, you're escaping a permanent premium. See our FHA-to-conventional guide for how to run it.
The same logic applies to lender-paid PMI, which is baked into your rate and cannot be cancelled under the HPA regardless of your equity.
Compare total monthly payment, not just the PMI line. Take your current payment including PMI, and compare it to the new payment at today's rate without PMI. Then divide your closing costs by the monthly difference to get the break-even in months. If you'd move or refinance again before that break-even, it isn't worth it.
Watch for the trick of a longer term: resetting a loan you've paid on for six years back to a fresh 30 years lowers the monthly payment while increasing lifetime interest substantially. A lower payment is not the same as a better deal.
No. A new conventional loan above 80% LTV will require mortgage insurance again — you'd pay closing costs and still have PMI. Wait until you have the equity, or cancel your existing PMI instead.
Only through the refinance itself. But you can order the same outcome far cheaper: ask your current servicer to cancel based on current value, and they'll arrange a BPO or appraisal for a fraction of refinance closing costs.
Yes — the original-value path. Once your balance reaches 80% of what the home was worth when you bought it, a written request is usually enough and typically requires no new valuation at all.
It can. If your new loan exceeds 80% LTV, the new lender will require mortgage insurance — sometimes at a worse rate than you had. Refinancing is not automatically a PMI escape.