Borrower-Paid Mortgage Insurance 2026: Rates, Cancellation Rights, and How PMI Is Calculated

Borrower-Paid Mortgage Insurance is the standard PMI structure on conventional loans with less than 20% down. The borrower pays a monthly premium that is cancelled once sufficient equity is established. BPMI is governed by the Homeowners Protection Act of 1998, which created specific cancellation rights that servicers must honor.

How PMI Rates Are Determined

PMI rates are set by the MI company, not the lender. They vary by FICO, LTV, loan term, and property type. General range: 0.20% to 1.50% of loan amount annually. A borrower at 680 FICO with 5% down pays meaningfully more than a borrower at 740 FICO with 10% down. The monthly PMI charge equals the annual rate divided by 12, applied to the loan balance.

Cancellation Rights Under the HPA

• ✦Borrower request at 80% LTV: the borrower may submit a written request for cancellation once the original LTV reaches 80% based on the original amortization schedule and original property value; the loan must be current
• ✦Automatic cancellation at 78% LTV: the servicer must cancel BPMI automatically when the scheduled payments bring the loan to 78% of original value; no borrower action required
• ✦Final termination: PMI must be cancelled at the midpoint of the loan term (year 15 for a 30-year loan) regardless of LTV, if the loan is current
• ✦Acceleration through appreciation: a borrower can request cancellation earlier if the property has appreciated, subject to additional requirements

Early Cancellation Through Appreciation

If the property value has increased, a borrower can request PMI cancellation earlier than the original schedule allows. Requirements: LTV at or below 75% with at least two years of payment history, or LTV at or below 80% with at least five years of payment history. An appraisal or BPO at the borrower's cost is typically required. The lender evaluates the request and confirms current LTV.

High-Risk Loan Exception

Lenders may designate a loan as high-risk (due to payment history, property type, or borrower risk profile), in which case they can require BPMI to remain in place until LTV reaches 80% based on current value rather than original value. This exception must be disclosed at origination.