You can remove PMI on your home's current value, not only its purchase price, if the loan is conventional and the numbers clear the investor's bar. On a Fannie Mae loan that bar is a loan-to-value ratio of 75% or less when the loan is two to five years old, and 80% or less after five years, confirmed by an appraisal or broker price opinion the servicer orders. What changed on September 16, 2026 is who may raise it: Fannie Mae now lets servicers contact homeowners who may qualify, where before the homeowner had to know to ask. For a Michigan agent, that makes every client who bought with less than 20% down since 2021 worth a short, accurate note.
In short
- September 16, 2026: Fannie Mae's Lender Letter LL-2026-07 lets servicers "proactively solicit" borrowers who may qualify to end mortgage insurance on current value (TENA, 2026).
- 75% and 80%: the current-value thresholds for a one-unit principal residence, for loans seasoned two to five years and over five years (Fannie Mae Servicing Guide).
- 38.80%: Michigan's five-year rise in FHFA's purchase-only house price index to the second quarter of 2026 (FHFA, 2026).
- About 40% of borrowers now sit under 80% loan-to-value, by Keefe, Bruyette and Woods' estimate reported by National Mortgage News (2026).
What changed on September 16, 2026
Until this month, Fannie Mae's own servicing rules said the servicer "must not solicit a borrower for MI termination based on current value of the property." A homeowner whose value had climbed could still ask. The servicer could not say so first.
On September 15, 2026, FHFA Director Bill Pulte directed Fannie Mae to line up with Freddie Mac, which already allowed that outreach, according to HousingWire. Fannie Mae's Lender Letter LL-2026-07 followed, effective September 16. TENA's summary of the letter is plain about scope: servicers may now tell borrowers what they need to do, but the termination requirements themselves did not change.
That last point is the one your clients will get wrong. Nothing about the thresholds moved. What moved is that more people will hear about them, some from a servicer and some from a neighbour, and a few will ring their agent to ask whether it applies to them.
The two routes to removing PMI, and which one uses today's value
There are two separate ways a conventional loan sheds private mortgage insurance, and they measure against different values.
| Route | Measured against | Threshold | Who starts it |
|---|---|---|---|
| Borrower request | Original value | 80% of original value | The borrower, in writing |
| Automatic termination | Original value | 78% of original value | The servicer, by law |
| Current value, 2 to 5 years | Today's value | 75% or less | The borrower; the servicer may now raise it |
| Current value, over 5 years | Today's value | 80% or less | The borrower; the servicer may now raise it |
The first two come from federal law, as the Consumer Financial Protection Bureau explains: a borrower may ask to cancel when the balance is scheduled to reach 80% of the original value, and the servicer must end it automatically at 78%, provided payments are current. The CFPB page is about paying the loan down. It does not cover appreciation.
The last two rows come from Fannie Mae's Servicing Guide B-8.1-04 and apply to a one-unit principal residence or second home. For an investment property or a two-to-four-unit principal residence the bar is 70% or less, with more than two years of seasoning.
What a Michigan client's numbers can look like
Take a buyer who closed in mid-2021 on a $250,000 house with 5% down: a $237,500 loan. Assume a 30-year fixed rate of 3%, which is our assumption for the example, not a quoted rate. After 62 payments the balance is about $210,200, which is 84.1% of the original value. On the original schedule, the automatic 78% date is roughly 93 payments in, early 2029.
Now apply Michigan's 38.80% five-year rise in FHFA's purchase-only index. $250,000 grown by that figure is $347,000, and $210,200 is 60.6% of it. The loan is past five years, so the bar is 80%. On the index, this owner clears it by a wide margin.
That is arithmetic on a statewide average, not a value for anyone's house. FHFA's figure blends every sale in the state. A Grosse Pointe colonial, a Kalamazoo ranch and a Traverse City condo need not have moved the same way. The number that counts is the one on the servicer's appraisal or broker price opinion, which Fannie Mae requires to include "an inspection of both the interior and exterior of the property." Our Michigan real estate market report shows how far county medians sit from the statewide figure.
Five checks before you tell a past client
- Confirm the loan is conventional and who owns it. Fannie Mae's rules are above. Freddie Mac already allowed servicer outreach and sets its own thresholds. A portfolio loan at a bank or credit union follows that lender's policy. The client can look up whether Fannie Mae or Freddie Mac owns the loan on each company's loan lookup page.
- Check the seasoning date. Count from the closing. Under two years, current-value removal is closed, unless substantial improvements raised the value and the loan-to-value ratio is 80% or less; then Fannie Mae waives the two-year wait.
- Check the payment record. Fannie Mae requires no payment 30 or more days late in the last 12 months and none 60 or more days late in the last 24 months. One late payment last winter is enough to wait.
- Tell them who pays for the valuation. HousingWire quoted a lender putting a new appraisal at $500 to $700, paid by the borrower. On a loan that is close to the line, that fee buys a yes or a no, not a guarantee.
- Leave the value to the servicer. You can say the rule and the threshold. You should not say what the house is worth for this purpose; the servicer's valuation decides, and a comparative market analysis is not what it will use.
The mistake most agents make at step 1
They send the note to every past client, including the ones on FHA loans. FHA mortgage insurance is not private mortgage insurance, and a higher value does not end it. Under HUD Mortgagee Letter 2013-04, for FHA case numbers assigned on or after June 3, 2013, the annual premium runs for 11 years when the original loan-to-value ratio was 90% or less and for the full term when it was higher. For those owners the only way out is a refinance, which is a conversation about rates, not a note about a rule. Our Michigan mortgage payment guide shows what today's rates do to a payment on the state median before anyone suggests one.
Who this helps
National Mortgage News reported Keefe, Bruyette and Woods' estimate that about 40% of borrowers sit below 80% loan-to-value, and the analyst expected modest take-up all the same. The gap between those two facts is the opening for an agent. The National Association of Realtors said on September 17 that consumers "should be aware when mortgage insurance is no longer needed." Most of them will only be aware if somebody they trust tells them.
Where this sits in your book of business
A note like this only works if it goes to the right people: conventional loans, bought with less than 20% down, closed at least two years ago, with the loan type recorded somewhere you can search. On many teams that sits in a closing spreadsheet nobody has opened since. Working an old database with a reason to call, and stopping cleanly when someone says no, is part of the real estate operations work we build. We do not value property, arrange refinances or advise on credit; the servicer and the lender decide.
The rule did not change on September 16. Who is allowed to mention it did.
