To deliver the best experience we store cookies on your device. Please accept our Term of Service to continue.

What is PMI in real estate?


What does PMI stand for?


PMI stands for private mortgage insurance and is charged to homeowners when less than 20% down payment is used. PMI "drops off" when the homeowner has a loan-to-value ratio (LTV) of 80% or less. LTV as it relates to automatic PMI removal is calculated based on the purchase price, not the current market value.


Can I drop PMI if my house appreciates?


If you performed a renovation that increased the value of your house, or the value of houses in your neighborhood has increased to a point where you believe you have an LTV of 80% or less based on current market value, then you can contact your mortgage servicer and request PMI removal.


Many people buy houses with a low percent down payment (i.e. 5% down), conduct a cost-effective rehab and then request PMI removal. Successfully removing PMI can reduce your monthly PITI expense considerably.