Homeowners who pay private mortgage insurance may start hearing from their loan servicer about getting rid of it. On Sept. 16, 2026, Fannie Mae told the companies that collect mortgage payments that they may now reach out on their own to borrowers who could be eligible to end that insurance because their home is worth more than it used to be. The change was effective the day it was issued, according to Fannie Mae’s Lender Letter LL-2026-07.
What Fannie Mae changed
Private mortgage insurance, usually called PMI, is an extra monthly charge on many loans where the buyer put down less than 20 percent. It protects the lender, not the homeowner. Once enough equity builds up, the borrower can ask to drop it.
Fannie Mae’s letter, titled “Updates to Mortgage Insurance Termination Requirements,” lets servicers proactively contact borrowers whose loans “may be close to or have reached” the loan-to-value requirements for ending mortgage insurance, based on the current value of the property. Servicers may also tell those borrowers what steps are needed to end the coverage. The announcement page carries the same summary.
Fannie Mae made the change at the direction of the Federal Housing Finance Agency, the letter says. It will be written into a future update of the company’s Servicing Guide. The section it amends is B-8.1-04, which covers borrower-initiated termination of conventional mortgage insurance based on the current value of the property.
The letter does not restate the loan-to-value numbers. It points to the guide section for them.
The people most likely to be affected hold conventional loans owned or backed by Fannie Mae and bought their homes with a small down payment. Those whose home values have climbed since they bought are the ones the letter has in mind. FHA and VA loans follow different rules, according to the Consumer Financial Protection Bureau.
PMI is a monthly charge, and Fannie Mae’s letter does not say how often servicers will recheck a home’s value or how many borrowers will be contacted.
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Why current value matters
Loan-to-value, or LTV, compares what is owed on a house with what it is worth. A home that has risen in price since the purchase can reach a lower LTV faster than the original payment schedule would suggest. That is the situation this letter has in mind.
The new permission lets the servicer make the first move. Nothing in the letter forces a servicer to send anything. It says servicers may.
The older PMI rules still apply
The federal rules that predate this letter have not gone away. The CFPB says that, for loans on a single-family primary residence closed on or after July 29, 1999, a borrower can ask the servicer to cancel PMI once the balance is scheduled to reach 80 percent of the home’s original value. Original value is usually the lower of the purchase price or the appraised value at purchase.
The servicer must grant the request if the borrower asks in writing, has a good payment history, certifies there is no second mortgage or other junior lien, and shows the home’s value has not fallen below its original value, for example with an appraisal.
Two automatic stops also exist. The servicer generally has to end PMI when the scheduled balance reaches 78 percent of the original value, and it must end it the month after the loan passes its midpoint, which is after 15 years on a 30-year loan. In both cases the borrower has to be current on payments. The CFPB page was last reviewed Aug. 28, 2026.
Investors such as Fannie Mae and Freddie Mac can set their own cancellation rules, the CFPB says, but those rules cannot be less favorable to borrowers than the federal ones.
Insurance that is not covered
The letter deals with conventional mortgage insurance on Fannie Mae loans. It says nothing about FHA mortgage insurance premiums or VA loans, and the CFPB notes that lender-paid mortgage insurance follows other rules too. A homeowner who is unsure which kind of insurance is on the loan can find it on the monthly statement or the original closing papers.
What may happen next
Fannie Mae has not said how many servicers will start sending notices, or when. The company says only that the policy is effective now and will appear in a later guide update. Each servicer decides whether and how to reach borrowers.
Steps for dropping PMI
A letter or call from a servicer is a prompt, not an approval. The CFPB’s explanation of when PMI can be removed is the free place to start, and it lists what a servicer can ask for: a written request, a clean payment record, a statement that there is no second lien, and proof of the home’s value.
Homeowners who think their home has gained value can gather recent sale prices on the street and the last mortgage statement, then ask the servicer in writing what it needs. Questions worth putting to the servicer are whether the loan is owned by Fannie Mae, whether it will accept a new appraisal, and who pays for it.
The monthly PMI charge is printed on each statement. Comparing that number with the cost of an appraisal shows how soon the savings would cover the expense.
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This article was produced with AI assistance and edited for accuracy against the sources linked above.
