A smiling young couple sitting at their dining table, reviewing mortgage documents and using a laptop to research how to cancel PMI on their conventional loan in Overland Park, Kansas.

How to Cancel PMI in Overland Park: The Conventional Loan Advantage

November 30, 2025
Rick Woodruff
Mortgage Basics, Mortgage Process, Mortgage Tools & Tips

For many homeowners in Overland Park, Private Mortgage Insurance (PMI) is an unavoidable part of securing a conventional loan, especially if your down payment is less than 20%. While PMI protects the lender, it adds to your monthly mortgage payment without directly building equity for you. The good news? Unlike some other loan types, conventional loans offer clear pathways to cancel PMI, potentially saving you thousands over the life of your loan.

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Understanding PMI and Conventional Loans

PMI is a type of insurance required by lenders on conventional loans when the borrower’s equity in the home is less than 20%. It mitigates the risk for the lender in case you default on your mortgage. While it might seem like an extra burden, conventional loans offer competitive interest rates and, most importantly for this discussion, defined routes to PMI cancellation.

The Key to Cancellation: Building Equity

The primary way to eliminate PMI on a conventional loan is by reaching 20% equity in your home. This can happen in several ways:

Scheduled Principal Payments: Every month you make your mortgage payment, a portion goes towards the principal balance. Over time, as your principal decreases and your home value remains stable or increases, your equity grows.
Home Appreciation: A rising housing market in Overland Park can significantly increase your home’s value. If your home’s appraised value increases, your equity percentage against the original loan amount also goes up.
Making Extra Payments: Even small extra payments towards your principal each month can accelerate your equity growth and get you to that 20% threshold faster.
Home Improvements: Strategic home improvements can boost your property’s value, contributing to increased equity.

How to Initiate PMI Cancellation

There are generally two main ways PMI is canceled on a conventional loan:

1. Automatic Termination

Under the Homeowners Protection Act (HPA) of 1998, your lender is legally obligated to automatically cancel PMI when your loan-to-value (LTV) ratio reaches 78% of the original purchase price or appraised value, whichever is less. This happens even if you haven’t requested it, as long as you are current on your mortgage payments.

2. Borrower-Requested Cancellation

You can request PMI cancellation once your LTV reaches 80% of the original value of your home. To do this, you’ll need to contact your mortgage servicer and formally request cancellation. They will likely require:

A good payment history: You’ll need to have a strong record of on-time payments.
No subordinate liens: You generally can’t have a second mortgage or home equity line of credit that would impact your equity.
An appraisal: The lender may require a new appraisal to confirm your home’s current market value and verify you’ve reached the 80% equity mark. This cost is usually borne by the homeowner.

Calculating Your Equity in Overland Park

To determine if you’re nearing the 20% equity mark, you’ll need two figures:

Your current loan balance: You can find this on your monthly mortgage statement or by contacting your servicer.
Your home’s current market value: This can be estimated through online tools, but for official PMI cancellation, an appraisal will likely be required by your lender.

Example: If your original loan was $300,000 and your home’s current appraised value is $350,000, and your current loan balance is $250,000:

Your equity is $350,000 (value) – $250,000 (balance) = $100,000
Your equity percentage is ($100,000 / $350,000) * 100% = 28.57%

In this scenario, you would be well past the 20% equity required for PMI cancellation.

When to Consider Refinancing

While direct cancellation is often the easiest route, in some cases, refinancing your conventional loan can also eliminate PMI. This might be a good option if:

Interest rates have dropped significantly: You could secure a lower interest rate and eliminate PMI.
Your home’s value has increased dramatically: If you’ve gained substantial equity, a refinance allows you to get a new loan with a lower LTV from the outset, thus avoiding PMI.
You want to change your loan terms: Perhaps you want to switch from a 30-year to a 15-year mortgage.

Remember, refinancing involves closing costs, so always weigh the potential savings against these upfront expenses.

Key Takeaways for Overland Park Homeowners

Monitor your equity: Keep track of your loan balance and home value.
Be proactive: Don’t wait for automatic cancellation if you believe you’ve reached 20% equity.
Contact your servicer: They are your primary resource for understanding their specific PMI cancellation policies.

Eliminating PMI can free up a significant amount of money in your monthly budget, bringing you closer to your financial goals in Overland Park.

For more detailed information on specific mortgage options and local lenders, explore these helpful resources: