When will PMI no longer be necessary on a loan with a 100% LTV ratio if the property value increases to $210,000?

To determine when private mortgage insurance (PMI) will no longer be necessary for a loan with a 100% loan-to-value (LTV) ratio, it is essential to understand how LTV is calculated and the thresholds for PMI removal.

Initially, with a 100% LTV ratio, the loan amount equals the property value, meaning there is no equity in the property. If the property's value subsequently increases to $210,000 while maintaining the same loan amount, say $210,000, the new LTV ratio can be recalculated based on the property value.

As property values increase, the LTV ratio will decrease proportionally, which can lead to PMI cancellation as equity grows. To remove PMI, lenders typically require the LTV to drop to a certain level, commonly 80%. Therefore, reaching an LTV of 80% is a crucial milestone.

When the property's value is $210,000, for the LTV to reach 80%, the loan amount must be no more than 80% of the property value. This means the outstanding loan balance should be $168,000 (which is 80% of $210,000).

Thus, once the property value increases and the loan amount is lower than