The Secret To Knocking PMI Off Your Mortgage Without An Expensive Appraisal

Regardless of your income, buying a home can be a complex process. Still, even broke people can buy a house with the right strategy, though they might need private mortgage insurance (PMI) to make it possible. PMI is required for anyone that takes out a conventional mortgage with less than a 20% down payment. While not necessarily advantageous for borrowers on paper, PMI is not necessarily a total waste of money, either. In fact, this option can give buyers without a significant down payment the ability to take out larger loans and even access more expensive properties.

An additional cost on top of your monthly mortgage payment, PMI is designed to protect lenders in the event that their borrowers default on their loan. Per the Urban Institute, PMI typically costs homeowners between .5% and 1.5% of their original loan per year, depending on a borrower's credit. With that said, once a loan balance reaches 80% of its original value, borrowers can appeal to have this PMI cancelled. Since homeowners already spend over $20,000 per year on non-mortgage expenses, cutting PMI from your budget as early as possible can be a smart financial decision.

However, in order to ensure that a property's value has been sustained during the time between when the mortgage was issued and when a borrower hits the 80% mark, lenders may require a home appraisal before approving a PMI cancellation. This home appraisal process can cost between $300 and $400, on average, in 2026, but it's not always the only option. Getting a broker's price opinion (BPO) can be a sufficient alternative in the eyes of some lenders — and it generally costs less, with estimates anywhere from $50 to $300.

While an appraisal requires a licensed professional to consider specific details about a property and its condition, a BPO is somewhat less official. Usually performed by a broker or real estate agent, this assessment takes less time is based largely on property values in the surrounding area. For this reason, not every lender allows a BPO to be used in place of an appraisal, so borrowers will want to look into the specific terms of their mortgage, and PMI, before going this route.

You can also potentially skirt the entire appraisal/BPO process by simply waiting your PMI out. In fact, PMI is automatically removed from a mortgage once your loan's principal balance reaches 78% of the house's originally appraised value. This means it might not necessarily be worth the hassle of eliminating PMI at the 80% mark — depending on just much your monthly PMI is, that is. Similarly, lenders are required to remove PMI once a borrower reaches the halfway point in their loan term. For instance, after 15 years on a 30-year conventional loan.