If you bought a home in the last few years with less than 20 percent down, there's a decent chance you're paying private mortgage insurance every single month without thinking much about it.
That extra line item usually runs between $30 and $150 monthly for a typical loan, quietly padding your payment for years.
The good news: there's a specific point where you can ask your lender to drop it, and a lot of homeowners miss it.
PMI exists because lenders consider a low-down-payment loan riskier.
Once you've built enough equity, that risk shrinks, and so should your payment.
The catch is that servicers don't always rush to remove it.
In many cases, you have to make the request yourself, in writing, and know exactly which threshold applies to your loan.
For most conventional loans, you can request cancellation once your loan-to-value ratio hits 80 percent of the home's original value.
That's based on the original purchase price or appraised value at closing, not today's market.
If you put 10 percent down, you're waiting until you've paid the balance down to that 80 percent mark.
If you put 5 percent down, it takes longer.
There's also an automatic termination rule.
Under federal law, your servicer generally must cancel PMI on the date your loan balance is scheduled to reach 78 percent of the original value, as long as you're current on payments.
The 80 percent request path just gets you there faster, sometimes a year or more early.
Pull your latest mortgage statement and find your remaining principal balance.
Divide it by the original home value from your closing paperwork.
If that number is at or below 80 percent, you may have grounds to call your servicer today.
Ask for the exact cancellation requirements in writing, because some lenders allow a new appraisal to reflect rising home values, while others stick strictly to the original price.
A history of late payments in the last 12 to 24 months is a common dealbreaker.
Investment properties and some government-backed loans follow different rules, and FHA loans often require refinancing to shed mortgage insurance.
If your loan is FHA, ask your servicer about the specific terms, since the rules changed for loans made after mid-2013.
Getting an appraisal can cost $400 to $700 out of pocket, so run the math first.
If you're paying $120 a month in PMI, that appraisal pays for itself in under six months once the payment drops.
If your equity is already there on paper, the request route may cost nothing but a phone call and some paperwork.
One more tip: mark your 78 percent date on a calendar now.
Servicers are required to send you an annual notice about cancellation rights, but those letters get buried in junk mail.
Knowing your own numbers puts you ahead of the process instead of waiting on a form letter that may never prompt you to act.
The bottom line: PMI is temporary by design, but it only ends on schedule if you're paying attention.
A 20-minute review of your loan balance could free up real money every month for years.
Final Thoughts
Check your numbers, call your servicer, and don't assume they'll do it for you.