Roughly 14 million American homeowners are paying for private mortgage insurance they may not need anymore, and many have no idea they qualify to stop.
PMI typically costs between 0.3% and 1.5% of the original loan amount each year.
On a $350,000 mortgage, that's anywhere from $1,050 to $5,250 annually, or about $88 to $437 drained from your budget every month.
The key threshold most borrowers should know: once your loan balance drops to 80% of your home's original value, you can formally request that your servicer cancel PMI.
At 78%, federal law under the Homeowners Protection Act requires automatic termination, provided your payments are current.
The catch is that the 80% mark doesn't happen on schedule for everyone, and servicers aren't required to remind you.
Home values surged in many markets over the past few years, which means millions of borrowers hit that 80% line faster than their original amortization tables predicted.
If you put down 10% on a $400,000 home in 2021 and values in your area climbed 20%, you may already be past the threshold on paper.
A new appraisal or a broker price opinion can confirm it, though you'll typically pay $300 to $700 out of pocket for the valuation.
The process itself is straightforward but requires follow-through.
Contact your servicer in writing, request cancellation in writing, and ask exactly what documentation they require.
Some lenders accept a recent appraisal; others want a full application package.
Federal rules also require servicers to provide an annual disclosure stating whether PMI can be canceled and how to do it, so check your statements.
There are exceptions that trip people up.
FHA loans work differently: if you put down less than 10%, mortgage insurance premiums generally last the life of the loan unless you refinance into a conventional product.
VA loans and USDA loans have their own funding fee structures that don't follow the same cancellation rules.
Borrowers with a history of late payments may also be denied cancellation even if they've crossed the 80% mark.
For homeowners sitting just under the threshold, there are two common moves.
One is making extra principal payments to push the balance down faster.
The other is paying for an appraisal if rising home values have already done the work.
A simple phone call to your servicer costs nothing and can clarify which path applies to your loan.
The math matters more than ever with mortgage rates where they are.
Refinancing to drop PMI often means trading a low pandemic-era rate for a higher one, which can wipe out the savings.
For many borrowers, cancellation on the existing loan is the cleaner win.
The Consumer Financial Protection Bureau publishes a free guide on PMI cancellation rights that's worth reading before you call.
Our take: this is one of the few household money moves that requires no market timing and no new debt.
If you've been paying PMI for years without checking your loan-to-value ratio, that's money quietly leaving your account every month.
Final Thoughts
A 20-minute call to your servicer is a reasonable place to start.