Millions of American homeowners are quietly paying for private mortgage insurance every month, and many have no idea they qualify to have it removed.
PMI typically costs between 0.3% and 1.5% of your original loan amount per year.
On a $350,000 mortgage, that's roughly $1,000 to $5,000 annually, folded silently into your monthly payment.
Here's the part that surprises people: lenders are not required to automatically cancel it the moment you cross 20% equity.
You have to ask, and you have to meet specific requirements.
The rules come from the Homeowners Protection Act of 1998, which sets two key benchmarks.
Borrowers can request PMI cancellation once they reach 20% equity based on their original home value and payment schedule.
Lenders must automatically terminate PMI at 22% equity, but only if your account is current.
If you've fallen behind on payments, that automatic cancellation can be delayed or denied.
Reaching 20% equity isn't just about paying down principal.
Rising home values count too, and this is where most people leave money on the table.
If your home has appreciated significantly, you may already be past the threshold.
The catch: lenders usually require a new appraisal to confirm the value, and that appraisal typically costs $300 to $700 out of pocket.
The math often still works in your favor.
Paying $500 for an appraisal to eliminate $2,400 a year in PMI is a return most investments can't touch.
Some lenders accept a broker price opinion or automated valuation model instead, which can cost less, though not every servicer allows it.
Your payment history matters as much as your equity.
Most lenders want to see 12 months of on-time payments before approving a cancellation request, and some want 24 months if you're using a new appraisal rather than the original amortization schedule.
A single late payment in that window can reset the clock.
There are also loan-type exceptions worth knowing.
FHA loans originated after mid-2013 with less than 10% down carry mortgage insurance for the life of the loan, and refinancing is often the only way out.
VA loans have their own funding fee structure, while USDA loans use a different guarantee fee system entirely.
Conventional loans are the ones where the 20% and 22% rules apply cleanly.
To start the process, pull your latest mortgage statement and find your current loan-to-value ratio.
Then call your servicer and ask directly: what are your specific requirements for PMI removal?
Get the answer in writing, including whether an appraisal is required and which valuation methods they accept.
If you're close to the 20% mark, waiting a few months of regular payments might get you there without paying for an appraisal at all.
If you're already well past it because of home price gains, acting now stops the bleeding sooner.
One more thing worth checking: your credit score and debt-to-income ratio.
Some servicers factor these into cancellation decisions even though the law doesn't strictly require it, so paying down a credit card balance before applying can smooth the path. **Our take:** PMI removal is one of the few financial moves where a single phone call and a modest appraisal fee can save four figures a year, yet most homeowners never make it.
Final Thoughts
Set a calendar reminder to check your equity annually, because nobody at your lender is going to do it for you.