A buyer takes a conventional mortgage on a home with an original value of $500,000. Under the Homeowners Protection Act, assuming the buyer is current and other conditions are met, at what principal balance can the buyer first request PMI cancellation?
Correct Answer
A) $400,000
The buyer can first request cancellation at a principal balance of $400,000. Formula: PMI request threshold = Original value × 80% = $500,000 × 0.80 = $400,000. CFPB explains that a borrower may request PMI cancellation when the principal balance is scheduled to reach 80% of the home's original value, assuming the borrower meets the required conditions.
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