On a purchase, mortgage insurance is based on the lesser of the appraised value or the sale price, and the rules come from the loan program, not the lender. Say you agree to pay $400,000 and the appraisal comes in at $395,000. The lender uses $395,000. If your 20% down was figured off the $400,000 price (a $320,000 loan), that loan against the $395,000 value puts you around 81 to 82% loan-to-value, which triggers mortgage insurance. Any lender treats that file the same way. Conventional, FHA, and VA all work off the lower of price or appraised value; USDA is the notable exception, since it can lend against the appraised value even above the purchase price. On the two removal thresholds, both come from the federal Homeowners Protection Act: - Requested cancellation at 80%. You can ask your servicer to cancel PMI when the balance reaches, or is first scheduled to reach, 80% of the home's original value (the lesser of price or appraised value at origination), subject to a good payment history and the servicer's conditions. - Automatic termination at 78%. PMI comes off automatically when the balance is first scheduled to hit 78% of original value, as long as you are current. The gap exists because 78% is the fixed, guaranteed backstop, while the 80% request lets you act sooner, including when extra payments have moved you ahead of schedule. If the home has appreciated, servicers may have separate removal options that usually require a new appraisal. Most homeowners do not track this closely enough to know the day they cross 80%, so if you think you are near it, ask your servicer exactly what they require to cancel early.