When Does PMI Go Away on a Conventional Loan?
Automatically at 78% of the home's original value, or sooner if you request it at 80%.
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A mortgage rule, not insurance
PMI protects the lender, not you, and it has nothing to do with homeowners insurance. Your lender tracks the payoff schedule and tells you when PMI ends. Your insurance binder and dwelling coverage are a separate requirement with their own deadline before closing.
Original value, not current value
The threshold is based on what the home cost when you bought it, not today's market value. If the home has gained value since closing, that gain doesn't count unless you ask the lender for a new appraisal, which costs money and isn't automatic.
You can request early removal
Once your loan balance is low enough, you can send the lender a written request to drop PMI. You'll need a clean payment history and sometimes a current appraisal showing no other liens on the house.
It also ends automatically
If you never ask, PMI still comes off once the balance falls low enough on its own, as long as payments are current. The exact date is on the loan documents from closing. It has no bearing on what your homeowners policy costs.
While PMI tracks the loan balance against the home's original price, your dwelling coverage needs to match what it would actually cost to rebuild the house today, which is often a different number entirely. Getting that figure right before closing matters more than the PMI date ever will, since it decides both what the lender accepts and what you'd actually recover after a loss.
What happens if the home's value went up since you bought it
PMI only tracks the loan balance against the original purchase price, so a rising market doesn't speed anything up on its own. If the home is worth meaningfully more now, the lender can be asked for a new appraisal to show the loan balance is low enough against current value. That appraisal costs money and the lender decides whether to accept it. Some lenders won't even consider a value-based request until the loan has aged a certain number of years, no matter how much the home has gone up.
Dwelling coverage works on a different question entirely. It's about what it costs to rebuild the house with today's materials and labor, not what a buyer would pay for the land and the house together. A home's market value can rise because of the neighborhood or demand, and none of that has anything to do with rebuilding cost. Construction costs can also climb on their own, even when market value stays flat, so the two numbers rarely move in step.
A home that's worth more since closing isn't automatically costing more to rebuild. PMI removal and insurance coverage can land on entirely different timelines for entirely different reasons. A lender might approve dropping PMI because of market appreciation while the dwelling coverage on the policy stays exactly where it was set at closing, since the rebuild estimate hasn't changed. Checking one number doesn't say anything about the other.
Before closing, the dwelling coverage figure should come from a rebuilding cost estimate, not from the purchase price or a mortgage appraisal. Appraisals done for loan purposes value the property for sale, land included. Insurers use a separate calculation that excludes the land and looks at square footage, materials, and local construction rates instead. Mixing the two up is a common way people end up underinsured, or paying for more coverage than the house would ever need to rebuild.
Is PMI escrow connected to the insurance escrow
Both PMI and the homeowners premium can sit inside the same monthly mortgage payment, which is why people assume they're connected. They aren't. The lender sets up one escrow account that collects pieces of several different costs. PMI, property taxes, and the insurance premium each get paid out on their own schedule to their own recipient. PMI goes to the mortgage insurer. The premium goes to the home insurance carrier. They never touch each other.
When PMI drops off, the monthly payment goes down because that slice disappears from escrow. The insurance slice stays exactly where it was. It only changes if the premium itself changes at renewal, for reasons that have nothing to do with PMI, like a rebuilding cost increase or a change in the home's claim history. People sometimes notice their payment drop after PMI ends and assume something shifted with the insurance too. Nothing did.
Before closing, the lender calculates an estimated first-year premium to fund the escrow account, based on the binder provided. That number needs to be accurate. Escrow shortages get corrected later with a lump sum or a higher monthly payment once the real premium comes in. If the binder understates the coverage, or the premium changes between binding and the first renewal, the escrow account can come up short. That gets fixed the following year regardless of what's happening with PMI.
Toward the end of the loan, once PMI is gone, the only moving part left in escrow is taxes and insurance. That's a good point to check the dwelling coverage figure again. Rebuilding costs change over time, and a policy set at closing years earlier may no longer match what it would actually cost to rebuild the house. The escrow account will adjust to whatever the premium is, but it won't flag whether the coverage amount itself still makes sense.
Before you sign anything
Check that the dwelling coverage on your binder comes from a rebuilding cost estimate, not the purchase price. Confirm the figure with whoever quotes your policy before it's sent to the lender.
