What is Mortgage Insurance and Can You Drop It?

Young smiling couple using laptop and smartphone, checking their home finances in the kitchen

Mortgage insurance is a policy that protects your lender in case you’re unable to make your loan payments. But here’s the key: It also helps make homeownership more accessible.

Because of mortgage insurance, lenders are able to approve loans with lower down payments—often under 20%. That means more people (like you) can buy a home without having to save for years. This insurance isn’t for every loan. It’s usually required when your Loan-to-Value (LTV) ratio is above 80%, which means you’ve borrowed more than 80% of your home’s appraised value.

How do I calculate my LTV ratio?

Loan-to-Value (LTV) = (Loan Amount ÷ Appraised Property Value) × 100
Example: If your home is worth $200,000 and you owe $160,000, your LTV is 80%.

Can I remove my mortgage insurance?

The short answer: It depends on your loan type. Here’s how it works:

Conventional Loans

  • Private Mortgage Insurance (PMI) is usually required if your down payment was less than 20%.
  • You can request cancellation once your LTV reaches 80%. Contact us to request a review of your account to determine when you can expect to reach this point, or how much you would need to pay to reach this threshold.
  • PMI must be removed automatically when your LTV reaches 78%, assuming you’re current on payments.

FHA Loans

  • FHA loans include a Mortgage Insurance Premium (MIP).
  • Some MIPs last for the life of the loan unless you renance into a conventional loan.
  • Others may end automatically after 11 years, depending on when the loan was issued and your down payment.

VA Loans

  • Good news—VA loans never require mortgage insurance.

USDA Loans

  • USDA loans include an Annual Guarantee Fee, similar to mortgage insurance.
  • This fee is required for as long as you have the loan and can only be removed by refinancing into a different loan type.

How do I find out if I qualify to cancel my mortgage insurance?

If you think you’re close to the 80% LTV threshold, we’re here to help. Log in to your account at HomeLoanServ.com, or email us at support@homeloanserv.com. We can help you review your loan details and explore your options.

Bottom Line

Mortgage insurance helps open the door to homeownership for more people—but you don’t have to keep paying it forever. Whether you’re planning ahead or ready to remove it, knowing your options can save you money in the long run.