When PMI Ends: The 80% and 78% Rule for Fixed-Rate Mortgages
Federal law sets two PMI milestones for fixed-rate mortgages from your loan's original amortization schedule: you can request cancellation when the balance reaches 80% of original value, and the lender must terminate it automatically at 78% of original value if you're current.
Federal law sets two milestones for ending private mortgage insurance on a fixed-rate mortgage: an 80% loan-to-value cancellation date, when a borrower can ask for PMI to be canceled, and a 78% loan-to-value termination date, when the lender must cancel it automatically as long as the borrower is current on the loan. These rules come from the Homeowners Protection Act, which took effect for residential mortgages closed on or after July 29, 1999. Below, we walk through exactly how those dates are calculated, using a $200,000 loan as a working example.
What the law actually requires
The Homeowners Protection Act, also called the PMI Cancellation Act, became effective for residential mortgages closed on or after July 29, 1999, and covers loans secured by a single-family dwelling that's the borrower's principal residence. The first is the *cancellation date* — the earliest point at which you, the borrower, can request that PMI be removed, which for a fixed-rate mortgage is the date the loan's original amortization schedule shows the principal balance first scheduled to hit 80% of the home's original value. For a fixed-rate mortgage, that date is fixed at closing: it's whichever month the loan's original amortization schedule shows the principal balance first scheduled to reach 80% of the home's original value, regardless of what you actually owe on that date. The second is the *termination date* — the point at which the lender must cancel PMI automatically, with no request needed, which for a fixed-rate mortgage is the date the original amortization schedule shows the principal balance first scheduled to hit 78% of the home's original value. For a fixed-rate mortgage, that date is also locked in from the original schedule, calculated as the month the balance is first scheduled to hit 78% of the original value; adjustable-rate mortgages instead use the amortization schedule in effect at the time. For fixed-rate mortgages, both dates are based solely on the loan's original amortization schedule and irrespective of the outstanding balance on that date.
A simple example from the FDIC
If the original value and the loan amount are both $100,000, the FDIC's example shows that once regular payments have reduced the outstanding balance to $80,000 — 80% of the original value — the homeowner can request to cancel PMI. Using that same $100,000 loan, automatic termination happens once the balance drops to $78,000 — 78% of original value — as long as you're current on payments at that point.
Running the numbers on a $200,000 loan
To see how this plays out on a more typical loan size, we assumed a $200,000 loan fixed at 6.5% for 30 years, fully amortizing with no extra principal payments, and — following the same simplifying convention the FDIC uses — treated the $200,000 loan amount as equal to the property's original value so the percentages line up cleanly in dollars; this is a simplification for illustration only, since a real loan carrying PMI would typically have a down payment under 20 percent, meaning the loan amount would be less than the original value and the real 80%/78% dates would arrive later than shown here. Under those assumptions, the monthly principal-and-interest payment comes out to about $1,264.14. The 80% cancellation threshold on this loan is a $160,000 balance, and the 78% automatic termination threshold is a $156,000 balance. Working through the amortization schedule month by month, the balance first falls to about $159,927 — at or below the 80% mark — at payment 146, which is roughly 12 years and 2 months into the loan. The balance then keeps falling, and it first drops to about $155,850 — at or below the 78% mark — at payment 156, exactly 13 years into the loan, which is the point PMI must automatically terminate if the borrower is current.
Worked example: the $200,000 loan timeline
Assume a $200,000 fixed-rate loan at 6.5% for 30 years (360 monthly payments), fully amortizing with no extra payments, and original value treated as $200,000 for simplicity, which is a simplifying convention: because a loan that actually carries PMI would have a down payment under 20%, the real-world 80%/78% dates on such a loan would arrive later than the payment numbers shown below. The monthly principal-and-interest payment is about $1,264.14, not counting property taxes, homeowners insurance or the PMI premium itself. The 80% cancellation threshold is a $160,000 balance, first reached around payment 146 (about 12 years, 2 months in), when the balance is about $159,927. The 78% automatic termination threshold is a $156,000 balance, first reached at payment 156 (exactly 13 years in), when the balance is about $155,850.
- principal: 200000
- monthly rate: 0.0054166667
- n months: 360
- k: 156
- Formula: principal*((1+monthly rate)^n months - (1+monthly rate)^k)/((1+monthly rate)^n months - 1)
- Result: 155850.47
Why there's also a 15-year midpoint rule — and why it rarely matters here
You may also hear about a rule that terminates PMI at the midpoint of the loan's original term. On our $200,000 example, the balance at payment 180 would be about $145,118, which works out to roughly 72.6% LTV, well under the 78% line. That confirms the midpoint rule never actually triggers anything new for this loan, because the 78% automatic termination date already occurred earlier in the schedule. CFPB guidance explains why: the midpoint rule is most likely to be the operative one for loans with interest-only periods, principal forbearance, or a balloon payment — situations where equity builds more slowly than on a standard amortizing loan. For this normally amortizing loan, the 78% rule ends up being the one that actually applies, as shown above. It's also worth remembering that the law itself only reaches back to loans consummated on or after July 29, 1999, which means standard 30-year loans didn't start becoming eligible for the midpoint provision until August 2014.
Cancellation vs. automatic termination
| Cancellation (80% LTV) | Automatic termination (78% LTV) | |
|---|---|---|
| Who acts | Borrower requests it | Lender must act with no request |
| LTV trigger | 80% of original value, based on the original amortization schedule, for fixed-rate mortgages, at the borrower's option | 78% of original value, based on the original amortization schedule, for fixed-rate mortgages |
| $100,000 FDIC example | Balance at $80,000 | Balance at $78,000, if current |
| $200,000 illustration | Balance about $159,927 at payment 146 | Balance about $155,850 at payment 156 |
Key takeaways
- For fixed-rate mortgages, federal law sets two dates from the loan's original amortization schedule: an 80% LTV date when you can request PMI cancellation, and a 78% LTV date when the lender must terminate it automatically.
- For fixed-rate mortgages, both dates are calculated using the loan's *original* amortization schedule and original value, irrespective of the actual outstanding balance on that date.
- In HLJ's illustration of a $200,000 loan at 6.5% for 30 years, which for simplicity treats the loan amount as equal to the original value, the 80% cancellation point falls around payment 146 (about 12 years, 2 months in) and the 78% automatic termination point falls at payment 156 (13 years in); a real PMI loan, which typically has a down payment under 20%, would reach these marks later.
- Automatic termination at 78% only happens on schedule if you're current on your payments at that point.
- A separate 15-year midpoint rule also exists, but in our $200,000 example it never comes into play because the 78% rule already terminates PMI earlier, at payment 156 versus the payment 180 midpoint; CFPB guidance notes this midpoint rule matters more for loans with interest-only periods, forbearance, or balloon payments.
Does the 80%/78% math use my current home value or the original purchase price?
For fixed-rate mortgages, it uses the original value of the property from when the loan closed, not any updated appraisal or market value. For fixed-rate mortgages, both the cancellation date (80%) and the termination date (78%) are calculated based solely on the loan's original amortization schedule and original property value, irrespective of the outstanding balance on that date; a different rule applies to adjustable-rate mortgages, which use the amortization schedule then in effect.
What happens if I've made extra principal payments — does PMI come off sooner?
For fixed-rate mortgages, the automatic termination and cancellation-eligibility dates set by the statute are locked to the *original* amortization schedule, irrespective of your actual outstanding balance on that date. That means extra payments won't move up those statutory dates themselves, since the dates are fixed by the original schedule regardless of your real balance; whether paying down principal faster lets you seek cancellation any earlier than that schedule allows is not something this statutory language addresses, so it could not be confirmed here.
What does 'current on your loan' mean for automatic termination to kick in?
The FDIC's example specifies that automatic termination at 78% applies to borrowers who are current on their loan at that point. That condition is tied to the borrower's payment status when the 78% balance is reached, rather than to how the balance itself is calculated, which for fixed-rate mortgages still relies solely on the original amortization schedule.
Why did 30-year loans only start hitting the midpoint rule in 2014?
The Homeowners Protection Act only applies to residential mortgages consummated on or after July 29, 1999, so a standard 30-year loan closed right at that effective date wouldn't reach its 15-year midpoint until August 2014.
Is the 15-year midpoint rule ever the one that actually ends my PMI?
It can be, but CFPB guidance notes it's more likely to be the operative rule for loans with an interest-only period, principal forbearance, or a balloon payment, situations where equity builds more slowly. For the $200,000 example above, the 78% rule arrives first and does the actual work, since payment 156 (the 78% termination point) comes before the payment-180 midpoint.