Rules for Dropping Mortgage Insurance

What you and your clients should know!

Dropping Conventional Mortgage Insurance Rules

Automatic Termination

Fixed Rate & Adjustable – Removed when reduced to 78% LTV


Based SOLEY on regular amortization (not prepayment of principal)

Additional Requirement:

Mortgage payment must be current

Borrower Requests Termination

Fixed & Adjustable – Removed when reduced to 78% LTV

Additional Requirements:

Submit cancellation request in writing

Good payment history

Current on mortgage payments

Appraisal or Certification that property value has not decreased BELOW the original value

No second liens or subordinated loans on property

** Note: Call for special information on how to apply for possible termination in 2 years

Dropping FHA Mortgage Insurance Premium Rules

For all loan types with the exception of Title 1 and Home Equity


For Conversion Mortgages (HEICM) the following chart applies:

Estimated Number of Years To
Drop Mortgage Insurance Chart

At application, do the math and let your clients know the estimated number of years that the PMI or MIP will be eliminated. The interest rate makes a difference, but here’s an example of a sales price/appraisal value of $250,000 at 6% interest rate, and based on making regular monthly payments (no principal pre-payment).

Loan-to-value figured on base loan amount WITHOUT UFMIP


Click here on on the image below to obtain a PDF copy of this informative report.

Rules for Dropping Mortgage Insurance