I’m Michael DiVita — DRE #01372066 | NMLS #241655, DiVita Home Finance (DRE #01818285 | NMLS #323700), Tiburon, CA. I’ve been in California mortgage lending since 2000 and founded DiVita Home Finance in 2007. Call (800) 239-1103.
Private mortgage insurance (PMI) is one of the most frustrating ongoing costs of homeownership — you pay it every month, and it protects the lender, not you. California homeowners paying PMI on a $700,000 loan can easily pay $300–$500 per month in PMI premiums. The good news: PMI is not permanent, and there are several ways to eliminate it faster than most homeowners realize.
What Is PMI and Why Do You Have It?
PMI is required on conventional loans when your down payment is less than 20% of the purchase price. In California, where median home prices exceed $800,000 in most coastal markets, a 20% down payment is $160,000 or more — an amount that puts homeownership out of reach for many buyers who could otherwise afford the monthly payment. PMI lets you buy with less down, but it adds a monthly cost until you’ve built enough equity.
PMI typically costs 0.5%–1.5% of the loan amount per year, paid monthly. On a $700,000 loan, that’s $292–$875 per month.
When PMI Automatically Cancels
Under the federal Homeowners Protection Act (HPA), PMI on a conventional loan must be automatically terminated when your loan balance reaches 78% of the original purchase price — based on your original amortization schedule, as long as you’re current on payments. You don’t have to do anything for this cancellation to happen.
You can also request cancellation (rather than waiting for automatic termination) when your balance reaches 80% of the original value. The lender must honor this request if you have a good payment history and no subordinate liens.
How to Remove PMI Early Based on Appreciation
In California’s strong real estate market, many homeowners reach 20% equity far faster through appreciation than through loan paydown. If your home has increased in value since you bought it, you may already have 20%+ equity — even if your loan balance hasn’t dropped much.
To remove PMI based on current value (rather than original purchase price), you must:
- Have owned the home for at least two years with the loan in good standing
- Have the home appraised (at your expense, typically $500–$700) by an appraiser approved by the lender
- Show that the current appraised value supports an LTV (loan-to-value ratio) of 80% or lower
- Submit a written request to your loan servicer with the appraisal
Example: You bought a California home for $750,000 with 10% down ($75,000). Your original loan was $675,000. Home values in your area have risen and your home is now worth $900,000. Your current LTV is $675,000 / $900,000 = 75% — well below the 80% threshold. You can request PMI removal today.
Refinance to Eliminate PMI
If your home has appreciated significantly, refinancing into a new loan can eliminate PMI entirely — because the new loan is structured based on the current value. If you now have 20%+ equity based on current market value, a conventional refinance will not require PMI at all. This also gives you the opportunity to adjust your rate, extend or shorten your term, or access additional equity through a cash-out refinance.
Refinancing makes most sense when current rates are comparable to or lower than your existing rate, when your equity position has improved significantly, or when the PMI savings offset the cost of refinancing within a reasonable timeframe (typically 2–3 years).
Make Extra Principal Payments
If appreciation hasn’t moved your LTV enough yet, paying down principal accelerates the timeline. Even an extra $200–$500/month toward principal can move you to 80% LTV months or years ahead of schedule. Request that extra payments be applied to principal (not future payments) when you submit them.
What About FHA Mortgage Insurance?
FHA loans have a different and stricter rule. If you put less than 10% down on an FHA loan originated after June 2013, mortgage insurance premium (MIP) stays for the life of the loan — it never cancels automatically. The only way to remove FHA MIP is to refinance into a conventional loan. This is one of the most compelling reasons for FHA borrowers with rising equity to consider a conventional refinance.
Steps to Remove PMI Today
- Call your loan servicer and ask your current LTV based on original purchase price and amortization
- If you’re near or below 80%, request PMI cancellation in writing
- If you’re below 80% based on current market value but not original price, order an appraisal
- If your home has appreciated significantly, get a refinance analysis to see if eliminating PMI through a new loan makes financial sense
Still Paying PMI? Let’s Run the Numbers.
California home values have risen significantly in recent years — many homeowners are paying PMI they don’t need to pay anymore. DiVita Home Finance can review your current loan, estimate your home’s current value, and tell you exactly whether a PMI removal request or a refinance makes more sense for your situation.
Frequently Asked Questions
When does PMI automatically cancel on a California home loan?
Under the federal Homeowners Protection Act, PMI on a conventional loan must automatically cancel when your loan balance reaches 78% of the original purchase price based on your scheduled amortization — as long as you’re current on payments. You can also request cancellation earlier, at 80% LTV, by submitting a written request to your servicer. You don’t have to wait for automatic termination — requesting it at 80% can save you months of unnecessary premiums.
How can I remove PMI early if my California home has appreciated?
If your home has increased in value and you now have 20% or more equity based on current market value, you can request PMI removal by ordering a new appraisal (typically $500–$700) and submitting a written request to your loan servicer. You must have owned the home for at least two years with a good payment history. If the appraisal confirms your LTV is 80% or below, the servicer must remove PMI. Alternatively, refinancing into a new conventional loan at current value eliminates PMI entirely if you have 20%+ equity.
Does FHA mortgage insurance ever go away?
Not automatically, for most FHA loans. If you put less than 10% down on an FHA loan originated after June 2013, the mortgage insurance premium (MIP) stays for the life of the loan — it never cancels on its own. The only way to remove it is to refinance into a conventional loan. If your California home has appreciated enough to give you 20%+ equity, a conventional refinance eliminates the MIP entirely and is often worth the cost of refinancing within 2–3 years of premium savings.
Talk to Michael Directly
DiVita Home Finance | Tiburon, CA | In lending since 2000, founded DiVita Home Finance in 2007. Michael DiVita DRE #01372066 | NMLS #241655. Company DRE #01818285 | NMLS #323700.
💬 Text: (310) 849-9124
