602-312-9571If you bought your Arizona home with less than 20% down on a conventional loan, there’s a good chance part of your monthly payment goes to private mortgage insurance, or PMI. PMI protects the lender if a loan goes bad. It doesn’t protect you, so most homeowners want it gone as soon as the rules allow.
The good news is that PMI on a conventional loan isn’t meant to last forever. There are generally three ways it comes off: it ends automatically, you ask for it to be cancelled based on your original value, or you ask for it to be cancelled based on your home’s current value. That last route is where an appraisal comes in.
This guide walks through each path in plain language. It’s written by Firebird Appraisals & Consulting in Gilbert. Our lead appraiser, Gabe Trevizo, is an Arizona certified appraiser (license 22146) and a VA designated appraiser who has been appraising homes across Maricopa and Pinal counties since 2005. We’re appraisers, not lenders, so your loan servicer always has the final word on your specific loan.
Step One: Call Your Servicer First
Before you do anything else, call the company you send your mortgage payment to (your servicer) and ask how they handle PMI cancellation. Rules vary by servicer and by the investor that owns your loan, such as Fannie Mae or Freddie Mac. Ask them to put the answers in writing if they can:
- What loan-to-value (LTV) ratio do I need to reach for cancellation?
- Is that based on my original value or my current value?
- How long do I need to have had the loan (seasoning)?
- What payment history do you require?
- Will you accept an appraisal I order from an independent certified appraiser, or do you order it through your own vendor?
- What type of appraisal report do you need?
That last pair of questions matters most. Many servicers order the appraisal themselves. Others accept one from an independent appraiser if it meets their requirements. Knowing which before you order saves you time and money.
Path 1: Automatic Termination at 78%
For most conventional loans made after mid-1999, the federal Homeowners Protection Act requires the servicer to end PMI automatically once your balance is scheduled to reach 78% of the home’s original value, as long as you’re current on payments. “Original value” generally means the lower of the purchase price or the appraised value when you got the loan. The Consumer Financial Protection Bureau (CFPB) explains these rules on its website.
There’s also a backstop called final termination. If PMI hasn’t already ended, it generally must come off at the midpoint of your loan’s amortization schedule, again as long as you’re current.
You don’t need an appraisal for either of these. The catch is that they follow your original payment schedule, which can take many years.
Path 2: Request Cancellation at 80% of Original Value
Under the same federal law, you can generally ask your servicer to cancel PMI once your balance reaches 80% of the original value, either through your scheduled payments or because you’ve made extra principal payments. To qualify, you usually need to make the request in writing, have a good payment history, be current on the loan, and in some cases show that the home’s value hasn’t dropped below the original value and that there are no other liens, like a second mortgage or HELOC, on the property.
If your servicer wants proof that the value hasn’t declined, they may ask for an appraisal or another valuation. Ask them exactly what they’ll accept.
Path 3: Cancellation Based on Your Current Value
This is the route many Valley homeowners ask us about. If your home has gained value since you bought it, your balance may already be 80% or less of what it’s worth today, even though it isn’t close to 80% of the original value yet.
Many servicers and investors allow PMI cancellation based on a new appraisal of current value, but the rules are usually stricter than the federal minimums. The required LTV and seasoning depend on your loan and who owns it, and investors like Fannie Mae and Freddie Mac publish their own requirements. Improvements you’ve made to the home can sometimes affect which rules apply. This is why that first phone call to your servicer is so important.
Here’s how the appraisal route typically works:
- Get the servicer’s requirements. Confirm the LTV they need, the seasoning, and whether they’ll accept an independent appraisal.
- Do a rough check. Divide your current loan balance by a realistic value for your home. If you’re nowhere near the required LTV, it may be worth waiting.
- Order the appraisal the way your servicer requires. If they accept an independent appraiser, send us their instructions, including the report type and who should be named as the intended user.
- The inspection. For a full appraisal, we visit the home, measure it, and note its condition, features, and updates.
- The report. Our typical turnaround is about five business days.
- The servicer decides. You submit the report (or they receive it directly), and the servicer makes the call on cancellation.
You can read more about how we handle these assignments on our PMI removal appraisal page.
What About FHA Loans?
FHA loans don’t have PMI. They have a mortgage insurance premium (MIP) that follows HUD’s rules, which are different from the conventional loan rules above. For many FHA loans, a new appraisal alone won’t remove MIP. Some homeowners refinance into a conventional loan once they have enough equity, which is a decision to make with your lender. If you’re looking at that option, see our page on refinance appraisals and our FHA and VA appraisal page.
VA loans generally don’t carry monthly mortgage insurance at all, so this question usually doesn’t come up for VA borrowers.
How to Give Your Home Its Best Shot at Appraisal
An appraisal can’t be steered toward a number, and no appraiser can promise a value. What you can do is make sure the appraiser sees everything your home has to offer:
- Make a list of improvements and when they were done, such as a kitchen or bath remodel, flooring, roof, HVAC, windows, a pool, or solar (and whether the solar is owned or leased).
- Take care of small, visible issues like a dripping faucet, a broken fixture, or a missing smoke detector.
- Make sure the garage, attic access, yard, and any casita or guest house are easy to get to.
- Have your HOA name and contact information handy.
For more tips, see our guide on how to prepare for a home appraisal in Arizona.
Local Comparable Sales Make the Difference
Your current value comes down to what similar homes near you have recently sold for. A newer home in Queen Creek, a 1990s home in Chandler, and a home on a larger lot in Gilbert each call for different comparable sales. We appraise homes for PMI removal throughout the region, including Gilbert, Mesa, Chandler, Queen Creek, and San Tan Valley. See our full service area for cities in Maricopa and Pinal counties.
Frequently Asked Questions
Do I need an appraisal to remove PMI?
Not always. Automatic termination at 78% of original value doesn’t require one. An appraisal usually comes in when you want PMI removed based on your home’s current value, or when your servicer wants proof the value hasn’t dropped.
Can I hire my own appraiser for PMI removal?
Only if your servicer accepts independent appraisals. Many order the appraisal through their own vendor, so ask them first.
What if the appraisal doesn’t come in high enough?
Your servicer will tell you whether you can try again later. Meanwhile, regular or extra principal payments keep lowering your balance.
Will an appraisal remove FHA mortgage insurance?
Usually not on its own. FHA MIP follows HUD’s rules. Talk to your lender about your options, including whether a refinance makes sense.
How long does a PMI removal appraisal take?
Our typical turnaround is about five business days after the order is confirmed.
Ready to See If PMI Can Go?
If your servicer accepts an independent appraisal and you think your Arizona home has gained enough value, Firebird Appraisals & Consulting can help with a clear, independent report for homes across Maricopa and Pinal counties. Call 602-312-9571 or request a quote online, and include your address and your servicer’s appraisal requirements.