How to remove PMI and save on your mortgage payment 

In this article: 

• What is PMI and why is it required? 
• When can PMI be removed? 
• How to request PMI removal 
• Tips for speeding up PMI renewal eligibility 

Private Mortgage Insurance, or PMI, is a common part of many home loans, especially for buyers who put down less than 20 percent of the home’s purchase price. Although PMI helps make homeownership more accessible, it also adds an extra cost to your monthly mortgage payment. The good news is that PMI does not last forever, and most homeowners eventually qualify to remove it. 

This guide explains how PMI removal works, the different paths you can take and what steps you should follow to eliminate this cost as soon as you’re eligible. 

What is PMI and why is it required? 

PMI protects the lender if a borrower stops making payments. It is typically required on conventional loans with less than 20 percent down. This insurance helps reduce risk for the lender, allowing more members to qualify for home financing. 

PMI is not permanent. As you build equity in your home by paying down your loan and possibly benefiting from home value appreciation, you can eventually request that PMI be removed. 

Removing PMI lowers your monthly mortgage payment and helps you save money over the life of your loan. 

When can PMI be removed? 

There are three primary ways PMI can be removed, depending on your loan type and situation. 

Borrower-requested PMI removal at 80 percent loan-to-value 

The most common way to remove PMI is by reaching 80 percent of the original home value. This means your loan balance has dropped to 80 percent or less of the value used when your loan closed. Requirements for borrower-requested PMI removal typically include: 

• A good payment history
• No subordinate liens
• Sufficient equity based on the original home value
• Verification that the property value has not declined
• Being current on your mortgage payments

Once you believe you have reached the 80 percent threshold, you may request PMI removal from Desert Financial. Our Mortgage Servicing team will review your loan to determine whether you qualify. 

Automatic PMI removal at 78 percent loan-to-value 

Federal law requires PMI to be removed automatically once your principal balance reaches 78 percent of the original home value, based on your loan’s amortization schedule. 

You do not need to submit a request for automatic PMI removal. It will happen on its own, provided your loan is in good standing and payments are current. 

Because this is based on the original amortization schedule, extra principal payments may not speed up the automatic removal, but they can still help you get to borrower-requested removal sooner. 

Removing PMI through a refinance 

If your home value has increased significantly, you may be able to remove PMI sooner by refinancing into a new loan. A refinance may help eliminate PMI if: 

• Your home value has risen since you purchased it. 
• Your new loan amount results in 80 percent or lower loan-to-value.
• You meet credit and income requirements for the new loan.

This option may be helpful if market rates are also favorable, allowing you to remove PMI and potentially lower your interest rate at the same time. 

How to estimate when you’ll reach 80 percent equity 

There are several ways to monitor your progress toward PMI removal: 

• Review your amortization schedule. This schedule breaks down how your loan balance decreases over time. 
• Check your loan balance in Online Banking. Your current principal balance helps you understand how quickly you’re paying down the loan. 
• Consider making principal-only payments. Additional principal payments can reduce your loan balance faster and help you reach 80 percent sooner. 
• Ask Desert Financial for guidance. Our Mortgage Servicing team can help you determine when you may become eligible. 

How to request PMI removal 

When you believe you qualify for PMI removal, contact Desert Financial Mortgage Servicing. We may require: 

• A written request
• An appraisal or valuation to confirm home value
• Verification that your loan is in good standing
• Confirmation that no subordinate liens exist 

If an appraisal is needed, you will receive instructions on how to complete this step. Once eligibility is confirmed, PMI is removed and your monthly payment will be lowered to reflect the change. 

How removing PMI affects your monthly payment 

Removing PMI reduces your total monthly mortgage payment. Depending on your loan, PMI can represent a significant portion of your monthly expenses. Many members save anywhere from $50 to several hundred dollars per month after PMI removal. Your new monthly payment will be reflected on your updated mortgage statement once the change is processed. 

Tips for speeding up PMI removal eligibility 

There are several ways to reach PMI removal sooner: 

• Make principal-only payments. Even small extra payments can reduce your loan balance more quickly. 
• Avoid late payments. Late payments may delay your eligibility for PMI removal. 
• Improve your home. Updates or repairs could increase your home’s value if an appraisal is required. 
• Monitor market trends. Rising home values may help you reach the required equity sooner. 
• Keep good financial records. If requested, valuation documents or proof of improvements can support your case. 

These steps can help you gain equity faster and remove PMI earlier than expected. 

When to contact Desert Financial 

We’re always here to support you with clear answers and member-first service. Contact Mortgage Servicing at (602) 433-7097 or firstmortgageservicing@desertfinancial.com if: 

• You believe you’ve reached 80 percent loan-to-value. 
• You want guidance on making principal payments.
• You have questions about your escrow or monthly payment.
• You are unsure whether you qualify for PMI removal.
• You would like help estimating your future eligibility.