Private mortgage insurance (PMI) on a residential mortgage comes off on one of three dates, and the Homeowners Protection Act of 1998 names all three in 12 USC s. 4902. The borrower may ask for cancellation at 80 percent of original value. The servicer has to terminate automatically at 78 percent of original value. And if neither has happened, the requirement ends on the first day of the month after the midpoint of the amortization period, if the borrower is current. Every cancellation and termination threshold in the chapter is measured against original value, never against what the house is worth today.
| Date | Threshold | Who acts | What else is needed |
|---|---|---|---|
| Cancellation date | 80% of original value | borrower asks in writing | good payment history, current, and if the holder requires them, evidence of no value decline and a no-subordinate-lien certification |
| Termination date | 78% of original value | servicer, automatically | borrower current on that date |
| Final termination | midpoint of the amortization period | servicer, automatically | borrower current on payments |
The words the chapter defines
Section 4901 supplies the vocabulary, and each definition decides a different question.
Original value is the lesser of the sales price in the contract or the appraised value at consummation. On a refinance of the borrower’s principal residence it is only the appraised value the lender relied on to approve the refinance.
Cancellation date, for a fixed rate mortgage, is either the date the principal balance is first scheduled to reach 80 percent of original value on the initial amortization schedule, ignoring the actual balance, or the date it reaches 80 percent on actual payments. The borrower picks. For an adjustable rate mortgage the same pair runs off the amortization schedule then in effect.
Termination date is the date the principal balance, on the schedule alone and irrespective of the actual balance, is first scheduled to reach 78 percent of original value.
Good payment history has two limbs, both of which have to be satisfied: no payment 60 days or more past due in the 12 month period beginning 24 months before the later of the cancellation date or the request, and no payment 30 days or more past due in the 12 months preceding that same later date.
Midpoint of the amortization period is halfway through the period that starts on the first day of the amortization period fixed at consummation and ends when the loan is scheduled to be fully amortized.
Two definitions decide coverage. A residential mortgage is secured by a single-family dwelling that is the borrower’s principal residence, and a residential mortgage transaction is one consummated on or after July 29, 1999, one year after enactment. Private mortgage insurance itself excludes insurance under the National Housing Act, title 38 or title V of the Housing Act of 1949, so Federal Housing Administration (FHA), Department of Veterans Affairs (VA) and United States Department of Agriculture (USDA) coverage sits outside the chapter.
Borrower cancellation and its four conditions
Section 4902(a) cancels the PMI requirement on the cancellation date, or any later date the borrower satisfies all four conditions: a written request to the servicer, a good payment history, being current on the loan, and meeting any holder requirement for evidence that the property value has not declined below original value and for certification that the borrower’s equity carries no subordinate lien. The evidence requirement has to be of a type established in advance and told to the borrower promptly after the request.
Automatic termination at 78 percent
Under s. 4902(b) the requirement terminates on the termination date if the borrower is current that day. If the borrower is not current then, it terminates on the first day of the first month beginning after the borrower becomes current. No request is needed and none of the cancellation conditions apply.
The Consumer Financial Protection Bureau (CFPB) spells out what follows at p. 3 of Bulletin 2015-03. Automatic termination is required even where the property’s current value has fallen below original value, so a servicer may not make the borrower pay for a valuation as a condition of it. Because the termination date runs off the schedule alone, extra principal payments cannot move it forward. They can move the cancellation date, which has an actual-payments branch.
Final termination at the midpoint
Section 4902(c) is the backstop. Where the requirement has not been canceled under (a) or terminated under (b), it may not be imposed beyond the first day of the month immediately following the midpoint of the amortization period, provided the borrower is current. On a 30 year loan that is just after the end of year 15.
High risk loans are the exception to (a) and (b), under s. 4902(g). For a loan within the conforming limit, high risk is determined by Fannie Mae and Freddie Mac guidelines; for any other loan the mortgagee determines it, and termination then happens when the scheduled balance first reaches 77 percent of original value. A high risk loan still terminates at the midpoint under subsection (c).
A loan modification resets the arithmetic. Section 4902(d) requires the cancellation date, the termination date and the final termination to be recalculated on the modified terms.
Stopping the money
Once the requirement ends, s. 4902(e) bars any further premium more than 30 days after the triggering event: the later of the request and the satisfaction of the evidence and certification requirements for a cancellation, the termination date or, for a borrower who was behind, the first day of the first month after becoming current for an automatic termination, or the final termination date. Section 4902(f) gives the servicer 45 days from termination or cancellation to return all unearned premiums, and gives a mortgage insurer holding them 30 days from the servicer’s notification to transfer them over. Section 4904(a) adds a written notice within 30 days of cancellation or termination saying the PMI has ended and no further premiums are due, and 4904(b) requires written grounds, including any appraisal result, where the servicer decides the loan did not qualify.
The disclosures at closing and every year
Section 4903 puts the borrower on notice twice over. At consummation a fixed rate borrower gets a written initial amortization schedule and a notice carrying four things: the right to request cancellation with the date it arrives on the schedule, the right to request it earlier on actual payments, the automatic termination date, and whether a high risk exemption applies. An adjustable rate borrower gets the same rights without the dates, plus a promise that the servicer will say when the cancellation date arrives. A high risk borrower gets a notice that PMI may never be required beyond the midpoint if the borrower is current. Then, every year PMI is in place, s. 4903(a)(3) requires an annual written statement of those rights with an address and telephone number for asking whether cancellation is available.
Lender paid mortgage insurance is handled separately at s. 4905. Sections 4902 through 4904 do not apply to it, so there is no cancellation right and no automatic termination. By the date of the loan commitment the prospective lender gives a written notice saying that lender paid coverage cannot be canceled by the borrower, usually means a higher interest rate, and ends only when the loan is refinanced, paid off or otherwise terminated, with a generic ten year cost comparison against borrower paid coverage.
Section 4907 sets the liability: actual damages with interest, statutory damages up to $2,000 in an individual action at United States Code release point 119-102, class action caps, costs and reasonable attorney fees, with a two year limit running from discovery of the violation.
FHA mortgage insurance premiums
Federal Housing Administration mortgage insurance premiums (MIP) fall outside PMI and outside the Homeowners Protection Act. Appendix 1.0 of FHA Handbook 4000.1, Update 18, at p. 1774, carries the date 03/20/2023 in its heading and the stamp Last Revised: 8/12/2026. It sets the annual MIP duration by loan to value (LTV) at origination: at or below 90 percent LTV the annual premium runs 11 years, and above 90 percent it runs for the mortgage term.
Sources
- Homeowners Protection Act, 12 USC ss. 4901 to 4907, United States Code release point 119-102.
- CFPB Bulletin 2015-03, PMI cancellation and termination, p. 3.
- FHA Handbook 4000.1, Update 18 (August 12, 2026), Appendix 1.0, Mortgage Insurance Premiums, p. 1774.