Washington homeowners often ask when they can stop paying private mortgage insurance (PMI). In most cases, this question is most relevant for conventional loans, because PMI cancellation is generally governed by the loan type and loan-servicer rules rather than a uniquely Washington-specific standard.
If you have PMI on a conventional mortgage, you may be able to remove it through a borrower request once you meet the required loan-to-value threshold, or through automatic cancellation later if the loan reaches the applicable point on its schedule. Lenders and servicers may also look at your payment history and, in some cases, require an appraisal or review other property-related factors.
This guide explains how PMI cancellation usually works for Washington borrowers, including borrower-requested cancellation, automatic cancellation, common payment-history expectations, and appraisal-related issues.
At a glance: Homeowners who are current on their mortgage payments can request PMI cancellation once their loan-to-value ratio falls below 80%. Automatic cancellation is possible when the LTV drops below 78%.
Private mortgage insurance (PMI) is an insurance policy that protects lenders when borrowers have a down payment of less than 20%. In Washington, as in most states, PMI is required to mitigate the increased risk associated with low down payments.
By requiring PMI, lenders have some assurance they’ll be reimbursed in the event of default. This in turn allows them to offer mortgages to borrowers with smaller down payments. PMI is typically included in the borrower’s monthly mortgage payment.
For most Washington homeowners with conventional loans, PMI cancellation starts with two baseline questions: have you reached the required loan-to-value threshold, and do you have an acceptable payment history? After that, your lender or loan servicer might apply additional conditions depending on whether the request is based on the original loan balance schedule or a current property value review.
Loan-to-value threshold: Borrowers can generally request PMI cancellation when the loan-to-value (LTV) ratio reaches 80% or less. Automatic cancellation generally occurs when the LTV reaches 78%. Depending on the situation, that calculation may be based on the original value used when the loan was made or a current value supported by an appraisal.
Payment history: In most cases, you must be current on your mortgage payments to request cancellation. Servicers also commonly look for a good payment history, which generally means no recent serious delinquencies and a record of on-time payments.
Even when you appear to meet the basic LTV threshold, your servicer might require more documentation before removing PMI.
Original value vs. current appraised value: Some cancellations are tied to the original amortization schedule of the loan, while others may depend on the home’s current value. If your request is based on home appreciation rather than just paying down the balance, the servicer may require a new appraisal of your property.
Subordinate liens: If there are other liens against the property, that can affect whether your request is approved.
Occupancy or property condition issues: Some servicers may also review whether the home is owner-occupied and whether the property condition supports the value being used for cancellation.
Refund of unearned premiums: If PMI is canceled or terminated, the servicer must return any unearned PMI premiums that are due to you within the required timeframe.
There are basically two ways to cancel private mortgage insurance in the state of Washington: the homeowner can submit a formal request, or wait for automatic cancellation to take place. Here’s the difference between these two methods.
Borrower-requested PMI cancellation: Borrowers can request that their mortgage insurance policy be canceled once their LTV ratio falls below 80%. They must also have a good payment history, and additional servicer conditions may apply. Usually, the homeowner will submit a written request to the loan servicer. These are the companies that handle administrative tasks like collecting payments, maintaining records, and managing escrow accounts. If the request depends on current property value, the servicer may require documentation such as an appraisal.
Automatic PMI cancellation: In this scenario, the mortgage lender or loan servicer will automatically cancel the borrower’s PMI policy once the LTV falls below 78%. The borrower does not need to request automatic cancellation, but it’s still wise to monitor your statements and follow up if the coverage is not removed when expected.
Removing PMI usually lowers your monthly housing cost, but the next decision is what to do with that savings.
You could keep the lower payment to improve monthly cash flow, which may help with savings goals, other bills, or planned expenses. You could also apply the amount you were paying for PMI toward your mortgage principal to reduce the balance faster and build equity sooner.
If you’re already evaluating broader mortgage options, it can also make sense to compare the monthly savings from PMI removal against any refinance alternative you might be considering. The right move depends on whether your priority is lower monthly cost, faster payoff, or overall flexibility.
If you have questions about canceling your current mortgage insurance policy, start by contacting your loan servicer and reviewing the paperwork you received when applying for and/or closing on your loan. If you had to take on PMI, you probably received a “Private Mortgage Insurance Disclosure” form with specific cancellation instructions.
Sammamish Mortgage can help. We serve clients across Washington, Idaho, Colorado, Oregon, and California. Since 1992, we’ve been providing several mortgage programs and products with flexible qualification criteria to borrowers across the Pacific Northwest. Visit our website to get an instant rate quote or to use our online mortgage calculator. Or, reach out to us if you are ready to get pre-approved for a mortgage.
In many cases, yes. For conventional loans, borrowers can generally request PMI cancellation once the loan-to-value ratio reaches 80% or less, as long as they are current on payments and meet the servicer’s requirements. Automatic cancellation generally occurs when the loan-to-value ratio reaches 78%.
Borrower-requested cancellation usually requires you to contact your loan servicer and show that you meet the required loan-to-value threshold and payment-history standards. Automatic cancellation happens later if the loan reaches the applicable point on its schedule, without a separate request from the borrower.
For conventional loans, PMI cancellation is generally tied to the loan-to-value ratio. Borrowers can usually request cancellation when the loan-to-value ratio reaches 80%, which is often described as having 20% equity. Some requests may also depend on a current property value review if home appreciation is part of the calculation.
Possibly. If your request is based on a higher current property value rather than only paying down the original loan balance, the servicer may consider cancellation using that current value. In that situation, the servicer may require an appraisal and may review other factors such as subordinate liens or property condition.
Sometimes. If PMI cancellation is based on your home’s current value rather than the original value used when the loan was made, the servicer may require a new appraisal. You should ask the servicer whether an appraisal is needed and who must order it.
This topic is usually most relevant to conventional loans. PMI cancellation is generally governed by the loan type and the loan servicer’s rules, so the process does not necessarily work the same way for every mortgage program.
You generally need to be current on your mortgage payments. Servicers also commonly look for a good payment history, which usually means no recent serious delinquencies and a record of on-time payments.
The monthly savings can be meaningful once PMI is removed, but the servicer may require additional documentation before cancellation. If the request depends on current property value, there may be appraisal-related costs. The exact amount, if any, depends on the servicer’s requirements.
Review your loan documents, confirm your estimated loan-to-value ratio, and contact the loan servicer to ask whether your loan has reached the required cancellation point. It is also wise to monitor your mortgage statements and request written confirmation when PMI is removed.
If PMI is canceled or terminated, the servicer must return any unearned PMI premiums that are due within the required timeframe. If you believe PMI was removed but no refund was issued when one should have been, ask the servicer for details in writing.
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