Home › Articles › PMI Removal Appraisal › PMI Removal Guide for Baltimore Homeowners
Yes, if you have an eligible conventional loan. Under Fannie Mae's servicing rules, a borrower can ask to end mortgage insurance based on current value when the loan-to-value ratio (LTV) is 75% or less after two to five years, or 80% or less after five years. Your payment record, your loan's investor and your servicer's valuation process all have to line up.
The step most homeowners get backwards: call your servicer before you order any appraisal. For Fannie Mae loans the valuation is ordered through the servicer, so an appraisal you buy on your own may not count. In September 2026, Fannie Mae also began allowing servicers to contact borrowers who are near or at the removal threshold, so ask yours whether you already qualify.
I am Ed Drost, a Maryland State Certified Residential Appraiser (License #30004874) and FHA appraiser. I have appraised Baltimore-area homes since 1989, and the equity question is usually a value question. Value is local, which is why it is worth checking. If you want the service page, see PMI Removal Appraisal.
You may be paying for insurance you no longer need
Picture a Towson homeowner who bought several years ago with less than 20% down. The lender required private mortgage insurance, and $150 a month has ridden along in the payment ever since. That is $1,800 a year.
Since then the balance has dropped, the neighborhood has seen higher sales, and maybe the kitchen got redone. The statement still shows the same $150.
Could you be paying PMI while holding more than 20% equity? Possibly. The answer depends on your loan type, who owns the loan, your payment history and the rules your servicer must follow.
What PMI is and what it costs
Private mortgage insurance protects the lender, not you, if you default on a conventional loan. It is typically required when the down payment is under 20%. It can make buying possible with less cash, but it adds to the cost of carrying the home.
Your premium depends on your credit profile, coverage level and LTV. These are illustrations that assume the premium stays the same:
| Monthly PMI | Per year | Over three years |
|---|---|---|
| $75 | $900 | $2,700 |
| $125 | $1,500 | $4,500 |
| $175 | $2,100 | $6,300 |
| $225 | $2,700 | $8,100 |
| $300 | $3,600 | $10,800 |
At $175 a month, removing PMI keeps $2,100 a year in your pocket. But an online estimate showing 20% equity does not cancel anything by itself.
The two ways to remove PMI
This is the most important distinction in the whole article. One route uses your original value. The other uses your current value.
Method 1: Original value (federal Homeowners Protection Act)
For many conventional loans, you can request cancellation in writing when the balance reaches 80% of the home's original value. Original value is generally the lower of the purchase price or the appraised value when you bought. For a refinance, it is the appraised value when the new loan began.
| Item | Amount |
|---|---|
| Original home value | $350,000 |
| 80% of original value | $280,000 |
| Current loan balance | $275,000 |
| Original-value LTV | 78.6% |
Here the borrower has passed the 80% line and may request cancellation without proving any appreciation. Servicers can still require a current payment status, no junior liens, and evidence the property has not fallen below its original value.
Two related federal protections: servicers generally must end PMI automatically when the scheduled balance reaches 78% of original value, and again at the midpoint of the loan term, if you are current. The 78% test follows the original amortization schedule, not extra principal you paid.
Method 2: Current value (investor rules)
This is where appreciation matters. Fannie Mae's servicing guide lets a borrower request termination based on current value:
| Property and loan age | Required current-value LTV |
|---|---|
| One-unit primary residence or second home, under 2 years | Not eligible, unless the improvement exception applies |
| One-unit primary residence or second home, 2 to 5 years | 75% or less |
| One-unit primary residence or second home, over 5 years | 80% or less |
| Investment property (1-4 units) or 2-4 unit primary residence, over 2 years | 70% or less |
You also need an acceptable payment record: current, no payment 30 or more days late in the last 12 months, and none 60 or more days late in the last 24 months. The LTV must be supported by a valuation with an interior and exterior inspection, ordered through the servicer.
These are Fannie Mae's rules. Freddie Mac and other investors have their own, so your servicer must confirm which apply to your loan.
The LTV math: what does your home need to be worth?
LTV is your outstanding principal divided by your home's value. Use the principal balance, not your payment or your escrow account.
LTV = principal balance ÷ home value × 100
A Baltimore County homeowner owes $300,000 on a home supported at $400,000. That is $300,000 ÷ $400,000 = 75% LTV, or about 25% equity. For a qualifying Fannie Mae loan between two and five years old, that meets the 75% line, though the other requirements still apply.
To work backward, divide your balance by the target LTV. On a $300,000 balance:
| Target LTV | Home must be worth at least |
|---|---|
| 80% | $375,000 |
| 75% | $400,000 |
| 70% | $428,572 |
A Parkville example: appreciation did the work
| Item | At purchase | Years later |
|---|---|---|
| Home value | $325,000 | $390,000 |
| Mortgage balance | $308,750 | $292,000 |
| LTV | 95% | 74.9% |
The buyer put 5% down ($16,250). Against the original $325,000, the loan is still at 89.8% LTV, so the federal 80% request is out of reach. Against a supported current value of $390,000, it is 74.9%, which may meet the current-value test. The market did part of the work, which is why knowing both methods matters.
These are hypothetical numbers. A servicer decides eligibility, and an appraiser reports what the market evidence supports.
Will my servicer accept an appraisal I order myself?
Often not, and this is the most expensive misunderstanding in PMI removal. For Fannie Mae loans, the servicing guide requires the valuation to come through Fannie Mae's servicing system, using the servicer's ordering procedure. A homeowner who pays for a private appraisal first can end up paying twice.
Servicers commonly use a broker price opinion or an appraisal that they order. Even when you pay the fee, they control the ordering and the acceptance. Some servicers and investors do have different policies, which is why you ask before you spend anything.
Before paying for any valuation, ask your servicer these six questions:
- Is my loan eligible for cancellation based on current value?
- Who owns my loan: Fannie Mae, Freddie Mac, or another investor?
- What seasoning, LTV and payment-history rules apply to me?
- Do you require an appraisal, a broker price opinion, or something else?
- Must you order it, or will you accept one I order?
- What does it cost, and who pays?
Where an appraiser does help. A private appraisal can still tell you what the market likely supports before you start the process, so you know whether you are near the line or still short. If your servicer says it will accept a borrower-ordered appraisal, I can prepare one that meets its stated requirements. Ask for those requirements in writing first. It does not replace the servicer's decision.
Why your neighborhood matters, and when renovations help
Values are local. A ZIP-code average cannot replace an analysis of your own property, and these Baltimore-area differences show why:
- Canton and Patterson Park: renovation level, parking, roof decks and finished lower levels drive buyer choice, but a new feature rarely returns its full cost.
- Towson and Lutherville: design, lot configuration, condition and location influences vary house to house. A sale from the next subdivision is not automatically a comparable.
- Parkville and Hamilton: additions, kitchens and baths matter only to the extent the market pays for them.
- Parkton, Monkton and Hereford: usable acreage, outbuildings and access change value. One large-lot sale can mislead without adjustments.
Renovations and the two-year rule
Fannie Mae allows the two-year minimum to be waived when improvements increased value, but the LTV must then be 80% or less. Qualifying work is typically a renovation that substantially improves marketability and extends the home's useful life, such as a kitchen or bath remodel or added square footage. You must give the servicer details of what you did. Repairs that only maintain the property do not count: painting a bedroom or fixing a faucet will not qualify.
A $60,000 remodel does not mean $60,000 of added value. The market decides what the work is worth, not the contractor's invoice.
FHA mortgage insurance follows different rules
As an FHA appraiser, I get this question often: home appreciation does not remove FHA mortgage insurance. The duration is set by HUD and depends on your original LTV and loan term, not on what your house is worth today.
For FHA case numbers assigned on or after June 3, 2013, HUD's rules for the annual premium work like this:
| Original LTV | Annual premium lasts |
|---|---|
| 90% or less | 11 years |
| Above 90% | Loan term (30 years on a 30-year loan) |
That means a borrower who started with the minimum 3.5% down is generally paying FHA insurance for the life of the loan. Loans with earlier case numbers follow older rules, and Title I and HECM loans are excluded from these duration changes, so check which applies to yours.
Some FHA borrowers consider refinancing into a conventional loan. Compare the new rate, closing costs, payment and credit qualification against what you pay now before you decide. Do not give up a low fixed rate just to remove one line on the statement.
Request removal or refinance? And how to do it
If your conventional loan qualifies, asking the servicer to cancel PMI usually beats refinancing because you keep your existing rate and terms. A refinance brings new closing costs, underwriting and a new rate. A homeowner with a low fixed rate from several years ago could pay more each month on a new loan even without PMI. The goal is a lower total cost of owning your home, not one fewer line item.
- Confirm your loan type. Check your statement and documents: conventional, FHA, VA or other.
- Find your principal balance. Use principal, not your payment or escrow balance.
- Find your original value. For a purchase, the lower of contract price and appraised value. For a refinance, the appraisal for that loan.
- Estimate current value. Use recent comparable sales. Online estimates are only a starting point.
- Calculate both LTVs. Original-value LTV and current-value LTV show which route might apply.
- Call your servicer. Ask for its PMI removal requirements in writing, and ask specifically about current-value cancellation.
- Complete the servicer's valuation process. Do not assume a private appraisal will be accepted.
- Submit the request and verify. Confirm the effective date, then check later statements to see that the charge has stopped.
Frequently asked questions
Can I remove PMI because my home went up in value?
Possibly. With an eligible conventional loan, current-value cancellation can apply once you meet the LTV, seasoning, payment-history and valuation requirements.
Do I need 20% equity?
It depends on the method. The federal request right uses 80% of original value. Fannie Mae's current-value route needs 25% equity at two to five years and 20% after five years for a one-unit primary residence or second home.
Can I remove PMI before two years?
Only through the improvement exception, and then the LTV must be 80% or less. Ordinary appreciation alone does not qualify.
Does an appraisal automatically end PMI?
No. It is one piece of evidence, and your servicer makes the decision.
Can I use Zillow or another online estimate?
Use it to see if you might be close. It will not replace the valuation your servicer requires.
Who pays for the valuation?
Often the borrower. Ask the servicer for the fee and procedure before you request anything.
Can PMI be removed without a refinance?
Yes. Eligible conventional loans can cancel PMI and keep the existing loan.
Do extra principal payments help?
Yes. They can bring you to the 80% original-value line sooner and improve your current-value LTV. They do not change the 78% automatic termination date, which follows the original schedule.
Does PMI end automatically at 20% equity?
Not exactly. Automatic termination generally happens when the scheduled balance reaches 78% of original value, and you must request cancellation at 80%.
Do the same rules apply to FHA?
No. FHA mortgage insurance follows HUD's duration rules, and appreciation does not remove it.
The bottom line: your equity may already be working for you
Your statement shows what you owe. It does not show what your home is worth today, and that gap could be costing you hundreds or thousands of dollars a year.
The first step is not an appraisal. It is asking your servicer which cancellation rules apply to your loan. If it turns out you are close to the line, or you want to know where your value really stands, call me at 443-904-5229.
Before ordering a private appraisal for PMI removal, confirm your servicer's valuation requirements. A privately ordered appraisal may not be accepted.
Sources
- Fannie Mae Servicing Guide B-8.1-04: Termination of Conventional Mortgage Insurance
- Orrick summary: Fannie Mae lets servicers proactively contact borrowers (September 2026)
- Fannie Mae Lender Letter LL-2026-07: Updates to Mortgage Insurance Termination Requirements
- TENA summary of LL-2026-07 (effective September 16, 2026)
- HUD Mortgagee Letter 13-04: FHA annual MIP duration
This article is general information, not legal or financial advice. PMI rules depend on your loan, investor, servicer, property type and payment history, and nothing here guarantees cancellation. Fannie Mae thresholds were checked against its servicing guide; Freddie Mac and other investors have their own rules, so confirm yours with your servicer. Last reviewed October 30, 2026.
More articles
Your Baltimore Property Tax Assessment Went Up. Here's How to Fight It Before You Overpay.
The 45-day SDAT deadline, which reassessment group you are in, what a $65,000 value correction is worth in the City vs. the County, and a 7-step appeal process.
Three Siblings Inherited a Baltimore Home. One Wants to Keep It. What's a Fair Buyout Price?
Who owns the house, which valuation date to use, a worked $450,000 buyout, what the mortgage changes, and what Maryland's heirs property law means if siblings disagree.
What Is an Independent Real Estate Appraiser? A Baltimore-Area Guide
What independent means, how it differs from a lender's appraisal, what it costs in Baltimore, the 45-day Maryland tax appeal deadline, and when to hire one.