If you purchased your California home with less than 20% down payment, you’re almost certainly paying PMI (Private Mortgage Insurance) every single month. But here’s what most homeowners don’t realize: you may be able to remove PMI without refinancing—depending on your loan type and how much your home has appreciated.
As a mortgage broker at Finance West Lending, I help California homeowners eliminate PMI every week. With home values continuing to climb throughout Los Angeles, Orange County, the South Bay, San Diego, and most California markets, many homeowners now have far more equity than they think—which means PMI removal may be much easier and faster than you imagine.
Let me show you exactly how to remove PMI from your mortgage, how much you can save, and whether refinancing might be an even better option for your situation.
PMI stands for Private Mortgage Insurance. It’s a monthly insurance premium added to your mortgage payment when you purchase a home with less than 20% down payment on a conventional loan.
Here’s what you need to understand about PMI:
It protects your lender, not you. If you default on your mortgage, PMI reimburses the lender for their loss. You pay for insurance that benefits the lender—not exactly a great deal for homeowners.
It is NOT permanent. Despite what many homeowners believe, PMI can and should be removed once you reach sufficient equity in your home.
It can be removed at 20-22% equity. Once you’ve paid down your loan balance or your home has appreciated enough that you have 20-22% equity, PMI can be eliminated.
It costs $100 to $600+ per month in California. The exact amount depends on your loan amount, down payment percentage, and credit score. On a $700,000 California mortgage, PMI typically runs $250-$450/month—that’s $3,000-$5,400 per year you’re paying for insurance that benefits your lender.
If you bought during California’s recent high-price period, PMI might be one of your largest unnecessary monthly expenses. The good news? You can probably eliminate it sooner than you think.
Yes—if you have a conventional loan. Conventional mortgages (loans backed by Fannie Mae and Freddie Mac) allow PMI removal without refinancing once you meet certain equity requirements.
However, if you have an FHA loan, the rules are completely different, and refinancing is usually your only option (more on that below).
Let me walk you through the three primary ways to remove PMI from a conventional mortgage without refinancing.
Under federal law (the Homeowners Protection Act of 1998), your lender is required by law to automatically remove PMI once you reach 22% equity based on your original purchase price.
Here’s how it works:
When your loan balance drops to 78% of your original home value through regular monthly payments, your lender must automatically cancel PMI—no request required.
Example:
Original purchase price: $700,000
Original loan amount: $665,000 (5% down)
PMI automatically removed when loan balance reaches: $546,000 (78% of $700,000)
For most California mortgages, this happens somewhere around year 10-12 of a 30-year loan, depending on your interest rate and payment schedule.
The catch: This is based on your original purchase price, not your home’s current value. If your home has appreciated significantly (which is common in California), you can remove PMI much earlier using the methods below.
You don’t have to wait for automatic removal at 22% equity. You can proactively request PMI removal once you reach 20% equity.
When your loan balance drops to 80% of your original home value, you have the right to request PMI cancellation.
Requirements for borrower-requested PMI removal:
Good payment history: You must be current on your mortgage with no late payments in the past 12 months (some lenders require 24 months).
No second liens: You cannot have a second mortgage or home equity line of credit on the property.
Proof of property value: You may need to provide evidence that your home hasn’t declined in value, typically through an appraisal or broker price opinion (BPO).
Example:
Original purchase price: $800,000
Original loan amount: $760,000 (5% down)
You can request PMI removal when loan balance reaches: $640,000 (80% of $800,000)
This method still uses your original purchase price as the baseline, but here’s where California homeowners have a significant advantage.
This is where California homeowners really win, and it’s the method I use most frequently to help clients eliminate PMI years ahead of schedule.
If your home has increased in value (which is extremely common in California markets), you can remove PMI using today’s appraised value—not your original purchase price.
Most lenders follow these guidelines for current-value PMI removal:
If your mortgage is 2 years old or more: PMI can be removed when you reach 75-80% LTV (loan-to-value ratio) based on current appraised value.
If your mortgage is 5 years old or more: PMI can be removed at 80% LTV based on current appraised value.
Let me show you how powerful this is with a real example from a client I helped last month:
Original purchase (2022): $700,000
Original loan amount: $665,000 (5% down with PMI)
Current appraised value (2025): $850,000
Current loan balance: $640,000
New LTV calculation: $640,000 ÷ $850,000 = 75.3% LTV
Even though my client only paid down $25,000 of principal, their home appreciated $150,000. This gave them enough equity to remove PMI immediately—saving them $315/month ($3,780/year).
Without using the current market value, they would have had to wait another 4-5 years and pay down their loan to $560,000 before qualifying for PMI removal. That’s approximately $15,000 in unnecessary PMI payments avoided.
This is one of the fastest and most effective ways to eliminate PMI in California’s appreciating real estate market.
When you’re requesting PMI removal based on current market value (rather than original purchase price), your lender will almost always require a new appraisal or broker price opinion (BPO).
Important details about the appraisal:
Your lender will order the appraisal through their approved network—you cannot use your own appraiser.
The cost typically ranges from $500-$700 in California.
The appraisal must show your home’s current value supports the required LTV (75-80% depending on loan age).
Your lender may deny the appraisal if they believe the value isn’t justified by comparable sales.
Is the appraisal cost worth it? Absolutely. If you’re paying $300/month in PMI and spend $600 on an appraisal, you’ve recouped the cost in 2 months. Every month after that is pure savings.
I always help my clients evaluate whether the appraisal is likely to support PMI removal before they spend the money. If the numbers are borderline, we discuss whether refinancing might be a better option.
Here’s the unfortunate truth for FHA borrowers: you cannot remove FHA mortgage insurance (called MIP, not PMI) without refinancing in most cases.
FHA mortgage insurance rules are much less favorable than conventional loan PMI rules:
If you put less than 10% down: MIP lasts for the entire life of the loan—30 years. The only way to remove it is to refinance to a conventional loan.
If you put 10% or more down: MIP lasts for 11 years, then automatically drops off. However, most FHA borrowers put down 3.5%, so this doesn’t apply to most people.
There is no early removal option based on equity. Even if you pay your FHA loan down to 50% LTV, the MIP stays until you refinance.
This is why FHA-to-conventional refinancing is extremely popular in California, especially as home values rise and borrowers gain equity.
Typical monthly savings when removing FHA MIP through refinancing: $200-$450/month, sometimes even more for higher-priced California homes.
If you currently have an FHA loan and you’ve gained significant equity, refinancing to a conventional loan to eliminate mortgage insurance is almost always worth exploring. I’ll run the numbers for you to show exactly how much you’d save.
The savings from PMI removal can be substantial, especially in California’s high-priced housing market.
Average monthly savings for California homeowners:
$150 to $350 per month for homes in the $500,000-$800,000 range
$300 to $600 per month for homes in the $800,000-$1,500,000+ range
Annual savings: $1,800 to $7,200+ per year
Over 10 years: $18,000 to $72,000+
This is money you can redirect toward savings, home improvements, debt reduction, investments, emergency funds, or long-term wealth building.
PMI removal is genuinely one of the easiest financial wins available to California homeowners. Unlike negotiating a lower insurance rate or cutting expenses, PMI removal is often a simple yes/no calculation based on your loan balance and home value.
Let me walk you through the exact process I guide my clients through when removing PMI:
Step 1: Check Your Current Mortgage Balance
Pull up your most recent mortgage statement or log into your loan servicer’s website. Find your current principal balance.
Step 2: Estimate Your Home’s Current Value
You can get preliminary estimates from Zillow, Redfin, or Realtor.com, but these are often inaccurate. Better yet, contact me at Finance West Lending for a professional valuation based on recent comparable sales in your specific neighborhood. I provide this service free of charge.
Step 3: Calculate Your Current Loan-to-Value Ratio
LTV = (Current Loan Balance ÷ Current Home Value) × 100
Example: $640,000 loan balance ÷ $850,000 home value = 75.3% LTV
If your LTV is 80% or below (and your loan is at least 2 years old), you likely qualify for PMI removal.
Step 4: Contact Your Loan Servicer
Call the customer service number on your mortgage statement and ask specifically about PMI removal eligibility. Ask them:
What is your current LTV requirement for PMI removal?
Do you need an appraisal or BPO?
What is your process for ordering an appraisal?
Are there any other requirements (payment history, no second liens, etc.)?
How long does the PMI removal process take once approved?
Step 5: Order a Lender-Approved Appraisal (If Required)
If your servicer requires an appraisal, they will provide instructions for ordering through their approved network. You’ll pay the appraisal fee upfront (typically $500-$700).
The appraiser will evaluate your home, review comparable sales, and provide a report to your lender within 1-2 weeks.
Step 6: PMI Removed from Your Payment
Once your lender approves PMI removal, it’s typically removed from your next mortgage payment. You’ll see an immediate reduction in your monthly payment equal to your PMI amount.
Timeline: The entire process typically takes 3-6 weeks from initial contact to PMI removal, assuming the appraisal supports the required LTV.
While removing PMI without refinancing is often the simplest option, refinancing may actually be the better financial move in several situations:
You have an FHA loan. Refinancing is your only option to remove MIP (mortgage insurance premium) from an FHA loan.
Your current interest rate is high. If you have a rate of 5.5% or higher and current rates are lower, refinancing lets you both remove PMI and reduce your interest rate—doubling your monthly savings.
You want to access cash from your equity. A cash-out refinance lets you remove PMI while also pulling equity for renovations, debt consolidation, or investments.
You have other high-interest debt. Refinancing with debt consolidation can eliminate PMI, lower your rate, and pay off credit cards or personal loans—all in one transaction.
You want a shorter loan term. Refinancing from a 30-year to a 20-year or 15-year mortgage removes PMI while building equity faster.
You want to significantly lower your total monthly payment. Combining a lower interest rate with PMI removal can reduce your payment by $300-$800+ per month.
Real example from my practice:
Client had an FHA loan at 6.5% with $385/month MIP on a $650,000 balance. Home appreciated to $900,000. We refinanced to a conventional loan at 6.25%. Result: removed $385/month MIP, lowered interest rate by 0.25%, and reduced total monthly payment by $445/month. Total annual savings: $5,340.
At Finance West Lending, I run both scenarios—PMI removal without refinancing vs. refinancing—so you can see exactly which path gives you the most savings. Sometimes simply removing PMI is best. Sometimes refinancing saves far more money. It depends entirely on your specific situation.
After years of helping homeowners navigate PMI removal, I’ve seen these mistakes repeatedly:
Mistake #1: Waiting for automatic removal at 22% equity
Many homeowners assume they have to wait until their loan naturally reaches 78% LTV based on original purchase price. They don’t realize they can request early removal at 80% LTV or use current market value to qualify even sooner.
Mistake #2: Not checking home appreciation
California homeowners often don’t realize how much their homes have appreciated. What they bought for $650,000 in 2021 might be worth $800,000+ today—that’s enough equity to remove PMI years earlier than expected.
Mistake #3: Assuming FHA mortgage insurance can be removed
FHA borrowers often believe their MIP works like conventional PMI and can be removed with enough equity. Unfortunately, FHA MIP rules are much stricter, and refinancing is usually the only option.
Mistake #4: Not considering refinancing
Some homeowners focus solely on PMI removal and miss the bigger picture. If current mortgage rates are lower than their existing rate, refinancing might save significantly more money than simple PMI removal.
Mistake #5: Using online home value estimates
Zillow and Redfin estimates can be off by 5-15% in California markets. Getting an accurate valuation from a local real estate professional or appraiser is critical before pursuing current-value PMI removal.
Mistake #6: Continuing to pay PMI after qualifying for removal
This is surprisingly common. Lenders won’t proactively tell you when you qualify for PMI removal (except for automatic removal at 22% equity). You need to request it. I’ve met homeowners who paid PMI for 2-3 extra years simply because they didn’t know they qualified for removal.
As a California mortgage broker specializing in PMI removal and refinancing, here’s what I provide:
Free PMI removal eligibility review. I’ll evaluate your loan balance, home value, and loan age to determine if you qualify for PMI removal right now.
Accurate home value estimates. I provide professional valuations based on recent comparable sales in your specific California neighborhood—far more accurate than online estimates.
Side-by-side comparisons. I’ll run the numbers for PMI removal without refinancing vs. refinancing to show you which option saves you the most money.
FHA-to-conventional refinance expertise. If you have an FHA loan, I specialize in refinancing to conventional loans to eliminate mortgage insurance permanently.
Exact monthly savings calculations. You’ll see precisely how much money you’ll save each month and over the life of your loan.
Fast refinance pre-approvals with no hard credit pull. Get accurate refinance numbers without impacting your credit score initially.
Service throughout all 58 California counties. Whether you’re in Los Angeles, Orange County, San Diego, the Bay Area, Central Valley, or anywhere in California, I help homeowners eliminate unnecessary mortgage insurance.
I make sure you never pay mortgage insurance longer than necessary. Every month you pay PMI after qualifying for removal is money wasted—I help you reclaim that money.
California’s consistently appreciating real estate market gives homeowners a unique advantage when it comes to PMI removal.
While homeowners in flat or declining markets must slowly pay down their loans to reach 20% equity, California homeowners often gain equity through appreciation much faster than through principal paydown.
Example:
Homeowner purchases in 2022 for $750,000 with 5% down ($712,500 loan)
After 3 years of payments, loan balance is $690,000 (only $22,500 paid down)
But home appreciated to $900,000 (20% appreciation, common in many California markets)
New LTV: $690,000 ÷ $900,000 = 76.7%
Qualifies for immediate PMI removal despite paying down less than $25,000 in principal
This is the power of California real estate appreciation combined with strategic PMI removal.
If you’ve owned your California home for 2+ years and home values in your area have increased, there’s a very good chance you qualify for PMI removal right now.
The question isn’t whether you should remove PMI—of course you should eliminate an unnecessary monthly expense. The question is whether you qualify today and what the best method is for your situation.
Let me evaluate your exact situation and show you precisely how much you can save by removing PMI—whether through simple removal, refinancing, or FHA-to-conventional conversion.
Let’s start your PMI removal analysis today:
📞 Contact Finance West Lending
NMLS 1494813
No hard credit pull. No obligation. Just honest answers about how much money you can save.
Stop paying for insurance that benefits your lender. Let me show you how to eliminate PMI and keep that money in your pocket every single month.
About Finance West Lending: We’re California mortgage brokers specializing in PMI removal, FHA-to-conventional refinancing, mortgage refinancing, and loan optimization throughout Los Angeles, Orange County, San Diego, and all of California. Our mission is to help homeowners eliminate unnecessary expenses and maximize their mortgage savings.