The short answer
Yes, a new appraisal can remove PMI if your home has gained enough value. Under common Fannie Mae and Freddie Mac guidelines, you can usually cancel PMI based on today's value once your balance is 75% or less of that value after two years, or 80% or less after five years. On a $360,000 loan at 6.5%, that means the home needs to appraise for about $462,800 after 3 years, or about $421,200 after 5 years. You typically pay for the appraisal, and you have to ask.
Why appreciation doesn't remove PMI on its own
The automatic PMI rules look at your home's original value, the lower of what you paid or what it appraised for at purchase. Your house could double in value and the 78% rule wouldn't notice. See when PMI comes off automatically for those rules.
To get credit for a higher value, you have to request cancellation based on current value, and prove that value with a new appraisal.
The rules most lenders follow
Most conventional loans are sold to Fannie Mae or Freddie Mac, and their guidelines for single-family primary homes and second homes look like this:
| How old the loan is | Balance must be at or below | Of the home's |
|---|---|---|
| Less than 2 years | Generally not eligible based on new value | |
| 2 to 5 years | 75% | Current appraised value |
| More than 5 years | 80% | Current appraised value |
You'll also typically need:
- A written request to your servicer
- No 30-day late payments in the past 12 months and no 60-day late payments in the past 24 months
- An appraisal or valuation ordered through your servicer
If your loan isn't owned by Fannie Mae or Freddie Mac, your lender sets its own rules. Ask.
The value your home needs
Here's a $400,000 home bought with 10% down: a $360,000 loan at 6.5%.
| Time since closing | Balance | Value needed to qualify | Increase over purchase price |
|---|---|---|---|
| 2 years | $351,683 | $468,911 (75% rule) | About 17% |
| 3 years | $347,102 | $462,803 (75% rule) | About 16% |
| 5 years | $337,000 | $421,249 (80% rule) | About 5% |
The jump at five years is the part people miss. Once you pass the five-year mark, the standard loosens from 75% to 80%, and a modest gain in value may be enough.
Want to know where your own loan stands? A free payoff projection shows your current balance and timeline.
Do your homework before you pay
An appraisal usually costs a few hundred dollars, and you typically don't get it back if the value comes in too low. Before ordering one:
- Find your balance. It's on your latest statement.
- Do the math. Divide your balance by 0.75 (or 0.80 after five years). That's the value you need.
- Check recent sales. Look at homes like yours that sold nearby in the past few months. If they sold well above your target, your odds are good.
- Call your servicer. Ask how they handle requests based on current value, who orders the appraisal, and what it costs.
Improvements can count
If your home's value went up because of significant improvements, like an added bedroom or a finished basement, some lenders will consider it even before the usual two-year wait. Fannie Mae generally requires the improvements to have been made by you, the original borrower. Keep receipts and permits.
Combine it with extra payments
Appreciation and extra payments work together. Every extra dollar lowers your balance, which lowers the value your home needs to qualify. Our guide to getting rid of PMI early shows how much each strategy saves, and the 20% equity milestone explains what else opens up once you get there.
After PMI comes off
Removing PMI frees up money every month. Sent to principal, it keeps shrinking your loan. If your family relies on your income to make the payment, it's also a good time to look at mortgage protection, the coverage that actually protects you, unlike PMI.
For a bigger step, Ridgewell's Mortgage Accelerator Program is designed to help qualifying households pay off a home in as little as 5 to 7 years.
Payoff timelines are illustrations for qualifying households and are not guaranteed.
Where to start
Divide your current balance by 0.75, or by 0.80 if your loan is more than five years old. If recent sales near you are above that number, call your servicer and ask about removing PMI based on current value.
For every way to drop PMI, see PMI explained. To see your own numbers, get a free payoff projection.
Examples assume a $400,000 home and a $360,000 30-year fixed mortgage at 6.5%, figures rounded. Thresholds shown are common Fannie Mae and Freddie Mac guidelines for single-family primary residences and second homes. Your lender's requirements may differ.
