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Substantial Improvements

  • Updated

What are considered substantial improvements?

As explained in our article about canceling private mortgage insurance (PMI), making substantial improvements to your property can boost its value and allow you to cancel PMI immediately based on this rise in value.

Generally speaking, substantial improvements increase the value, marketability, or useful life of your property. However:

  • Substantial improvements must be made after you have received your mortgage loan
  • Repairs made to maintain functionality (such as replacing roofing, flooring, or appliances with the same materials) or, often, improvements to cosmetics alone are not considered substantial
  • Improvements that are financed and removable (such as solar panels) also are not often considered substantial
  • Your loan's owner determines whether improvements are considered substantial, and we do not have any input into that decision

Improvements are most likely to be considered substantial if they cost or add value in an amount equal to the balance you have left to pay down on your loan to reach 80% of your property’s Original Value. If you believe you've made substantial improvements sufficient to cancel your PMI, let us know and we'll begin the PMI cancelation process.

💡Tip: Canceling PMI based on substantial improvements requires a property valuation. We'll only order a property valuation for you (1) after receiving a description of the improvements from you, and (2) if the improvements appear to in fact be substantial. 

Illustration and Examples

Here’s an illustration. Say a property's Original Value is $100,000, and the homeowner’s current, total loan balance is $90,000. If the homeowner spends $10,000 on a bathroom remodel—which is the amount left to pay down to reach $80,000 (80% of Original Value)—the improvement would likely be considered substantial, allowing PMI to be canceled. 

Although we cannot guarantee that any improvements will qualify as substantial, possible examples include:

  • Adding square footage
  • Construction requiring permits
  • Significant structural alterations
  • Adding new components or appliances
  • Replacing components or appliances with energy-efficient versions
  • Constructing a garage
  • Building a deck
  • Adding a new patio
  • Upgrading to tankless water heater
  • Adding built-in appliances
  • Adding a sprinkler system
  • Converting to a smart home
  • Doing a bathroom remodel
  • Adding a new bedroom
  • Adding a pool

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