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A new federal initiative could eventually help some homeowners stop paying private mortgage insurance without having to ask for its removal.
But Raleigh buyers considering a smaller down payment shouldn't count on that savings just yet.
The October 22, 2026 executive order calls for a conditional pilot that would proactively identify mortgages potentially eligible for insurance cancellation. The order sets no launch date and limits the pilot to mortgages made after it is established. A lender or servicer would need to confirm whether a particular loan qualifies under any implemented rules.
That distinction matters when a buyer is deciding how much cash to bring to closing.
At a hypothetical $425,000 purchase price, putting 5% down instead of 20% leaves $63,750 more cash available before closing costs and other expenses.
It also means a larger mortgage and, with many conventional loans, a monthly private mortgage insurance charge.
The initiative could eventually simplify cancellation for qualifying future borrowers, but it establishes no individual cancellation date or savings amount. A buyer making an offer today needs a payment that works with PMI included.
What the October 22 Mortgage Insurance Order Would Change
The executive order, signed October 22 and published in the Federal Register on October 28, addresses a problem some homeowners may not realize they have.
They could qualify to stop paying mortgage insurance but never request a review.
Under Section 2 of the order, the director of the Federal Housing Finance Agency (FHFA) would direct Fannie Mae and Freddie Mac to establish the pilot only if he determines it is in the best interests of those two companies or FHFA, and also of the American public.
The program would periodically examine single-family mortgages owned, guaranteed or securitized by Fannie Mae or Freddie Mac, using automated valuation models and other approved information to identify borrowers who may qualify for cancellation.
An automated valuation model estimates a property's value using available data. That could help servicers identify homeowners whose equity has improved without requiring every borrower to initiate the process.
But an estimate alone wouldn't guarantee cancellation.
The borrower would still have to satisfy the applicable equity, payment-history, contractual and other legal and financial-soundness requirements.
The order also calls for prompt notification of eligible borrowers and reduced unnecessary documentation and appraisal costs where legally and operationally feasible.
The order provides no pilot launch date or universal current-value equity threshold. Its eligibility limitation applies to when a mortgage is made: A loan originated after October 22 doesn't automatically qualify merely because it followed the executive order.
And existing homeowners aren't left without options. Some already have ways to cancel PMI using their original mortgage value or a newer property valuation.
The immediate question for buyers is how the insurance affects the payment they'll actually make.
The $425,000 Raleigh Down-Payment Decision
Private mortgage insurance, or PMI, commonly applies when someone buys a home with a conventional mortgage and puts less than 20% down.
It's insurance for the lender, not the homeowner. If the borrower defaults, PMI helps protect the lender against losses. It doesn't protect the borrower from foreclosure or cover damage to the property.
The Consumer Financial Protection Bureau explains that monthly premiums are the most common arrangement, although some mortgages use upfront premiums or a combination.
Now consider a Raleigh buyer choosing between three down payments.
HomesRaleigh's Raleigh Housing Market Report shows a median closed-sale price of $425,000 for September 2026. Using that figure strictly as an illustrative purchase price:
- 5% down: $21,250 upfront toward the price, leaving approximately $403,750 in initial mortgage principal.
- 10% down: $42,500 upfront, leaving approximately $382,500 in principal.
- 20% down: $85,000 upfront, leaving approximately $340,000 in principal.
Those figures exclude closing costs and any financing adjustments or fees.
The difference between 5% and 20% down is $63,750 in cash.
For a first-time buyer, that money could be important. Moving expenses, repairs and emergency savings don't disappear after closing.
Putting 20% down generally avoids required PMI on a conventional purchase loan and reduces the amount borrowed. A smaller down payment preserves cash while generally increasing the loan balance and potentially adding PMI. Neither choice is automatically best for every household.
And the insurance premium varies. Credit profile, down payment, loan structure, insurance coverage and lender pricing all affect the quote.
Some loans advertise no monthly PMI but incorporate insurance-related costs into other pricing, potentially through a higher interest rate. An upfront premium may not be refundable if the homeowner sells or refinances.
Monthly PMI, when charged separately, appears in the Projected Payments section on page one of the Loan Estimate and Closing Disclosure, alongside principal, interest, property taxes and homeowners insurance. That's the quoted payment a buyer can budget for, rather than a possible future cancellation.
Raleigh's Median Sale Price Fell 5.1%. What Does That Mean for PMI?
The September housing figures add another consideration.
HomesRaleigh's Doorify MLS report shows Raleigh's median closed-sale price at $425,000, down 5.1% from September 2025.
But that doesn't mean every Raleigh homeowner lost 5.1% in property value.
The report covers 474 closed residential listing records labeled Raleigh in Doorify MLS, including 307 single-family sales with a $530,000 median, 135 townhouse sales with a $315,280 median and 32 condo sales with a $296,000 median.
Those are different property groups with different price levels.
A change in the mix of homes sold can move the overall median even when an individual property's value follows a different path.
The MLS city label also doesn't necessarily match Raleigh's exact municipal boundaries, and the listing-record count isn't a certified count of unique property transfers.
For PMI cancellation, the relevant measure is the loan-to-value ratio, or LTV: the mortgage balance divided by the property value accepted under the applicable rules, not Raleigh's median sale price.
Consider the earlier $425,000 example. If that amount is also the loan's applicable original property value, 80% would equal $340,000.
A buyer starting with a $403,750 mortgage balance would need to pay down a substantial amount of principal to reach that original-value threshold.
Changes in the home's current value might create a separate cancellation opportunity under certain mortgage-servicing rules.
But a Zillow estimate, county tax assessment or citywide median isn't automatically an acceptable valuation for mortgage-insurance cancellation.
Existing Homeowners May Already Be Eligible to Cancel PMI
Homeowners don't necessarily need a new federal pilot to remove private mortgage insurance.
For covered conventional mortgages, the CFPB's cancellation guidance explains rights established under federal law.
For qualifying single-family principal-residence mortgages closed on or after July 29, 1999, borrowers can generally request PMI cancellation when the balance is scheduled to reach 80% of the home's original value.
Paying down principal ahead of schedule can also create an opportunity to request cancellation earlier.
The borrower typically must make the request in writing, remain current, meet the applicable payment-history requirements and certify that there are no junior liens, such as a second mortgage. Evidence that the property's value hasn't fallen below its original value may also be required.
Automatic PMI termination generally occurs when the mortgage is scheduled to reach 78% of original value, provided the borrower is current. Federal rules also provide for midpoint termination under specified circumstances.
Those standard thresholds use the mortgage's applicable original value, not an estimate of what the home might sell for today.
For purchase loans, original value generally means the lower of the contract price or the appraisal used at purchase. For refinancing, the relevant original value generally comes from the refinance appraisal.
But appreciation can matter through another route.
Current-value cancellation already exists
Under Fannie Mae's servicing rules, qualifying borrowers with one-unit primary residences or second homes can request cancellation based on current market value.
The ordinary requirements include:
- A current loan-to-value ratio of 75% or less when the loan is between two and five years old.
- A current loan-to-value ratio of 80% or less when the loan is older than five years.
- Qualifying substantial improvements may allow an exception to the usual requirement that the loan be at least two years old, subject to an 80% LTV requirement.
Other property types have different rules. Payment history, eligibility conditions and a valuation obtained through the required servicing process still matter.
Freddie Mac's current servicing guidance also provides current-value cancellation routes, including comparable 75% and 80% thresholds in specified circumstances.
There is a notable difference in how the existing systems approach the process.
Fannie Mae's current-value guidance generally relies on borrower-initiated requests. Freddie Mac already permits servicers to systematically identify potentially eligible mortgages and notify borrowers about next steps, although cancellation still requires the applicable borrower request or affirmation and satisfaction of the rules.
The order envisions broader proactive review and cancellation for qualifying mortgages made after the pilot is established; existing borrowers can use today's servicing options.
How to Check Whether Your Current Mortgage Qualifies
Start with the company collecting your mortgage payment.
Ask the servicer which mortgage-insurance rules apply to your loan, whether cancellation can be considered using current property value and what documentation or valuation may be required.
If you're unsure whether Fannie Mae or Freddie Mac owns the mortgage, their official lookup tools can help:
These tools identify whether the respective Enterprise owns a mortgage. They don't determine cancellation eligibility or replace the loan servicer.
A current-value request may require a servicer-ordered appraisal, broker price opinion or another prescribed valuation. There may be a charge, and the borrower must satisfy the applicable payment and eligibility conditions.
Loan type also matters.
Conventional borrower-paid PMI is different from Federal Housing Administration mortgage insurance premiums. FHA loans have separate mortgage-insurance rules.
VA loans don't follow conventional borrower-paid PMI rules.
Lender-paid mortgage insurance can also operate differently from a separately billed monthly premium.
The October order doesn't automatically change those arrangements or promise refunds for premiums already paid.
What Raleigh Buyers Should Count in Their Monthly Payment
For someone paying monthly borrower-paid PMI, cancellation can remove that insurance charge. It doesn't reduce the loan's principal balance, interest rate, property taxes or homeowners insurance. Upfront premiums and insurance costs incorporated into loan pricing don't necessarily disappear the same way.
A future refinance might produce a mortgage made after the pilot is established, but the order doesn't determine whether a particular refinance would qualify. New interest rates, closing costs and loan terms would also affect whether refinancing makes financial sense.
HomesRaleigh's First-Time Homebuyer Programs guide discusses financing and assistance options. Closing Costs in Raleigh covers additional upfront expenses, while Buying vs. Renting addresses ongoing housing costs.
Buyers considering specific Raleigh or Triangle properties can contact Raleigh Realty to discuss price ranges, locations and a home search based on available cash and a realistic monthly budget. The lender determines loan pricing and mortgage-insurance requirements; the servicer determines cancellation eligibility.
Conceptual editorial watercolor of Raleigh-area housing and a blank mortgage-budget worksheet. Not an actual loan, premium quote, government endorsement or promise of PMI savings.
