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 month without thinking much about it.
That PMI line item typically runs between 0.3 percent and 1.5 percent of your loan amount annually, which on a $350,000 mortgage can mean $100 to $400 extra per month.
The good news is that removing it may be easier than many homeowners assume — and for a large group of borrowers, the math has quietly shifted in your favor.
The core rule is set by federal law: your servicer must cancel PMI automatically once your loan balance drops to 78 percent of the home's original value, based on the original amortization schedule.
You can request cancellation once you hit 80 percent loan-to-value, and that request has its own requirements you'll want to get right.
First, you generally need a good payment history.
Most servicers want no payments more than 30 days late in the past 12 months, and no more than one late payment in the prior two years.
Second, you'll typically need to certify that the property is still your primary residence or a second home — investment properties usually face stricter rules.
Third, some servicers will ask for a current appraisal or a broker price opinion to confirm the home's value, which can cost a few hundred dollars out of pocket.
Because home values jumped so sharply in many markets, plenty of borrowers are already past the 80 percent threshold on paper — they just haven't asked.
If you put 10 percent down in 2021 and your home has appreciated 20 percent since, your actual loan-to-value could be well under 80 percent right now, even though your loan balance hasn't hit that mark on the original schedule.
In that case, requesting removal with a new appraisal could save you thousands over the remaining life of the loan.
One caveat worth knowing: for FHA loans, the rules are different and often harsher.
If your FHA loan started after June 3, 2013, and you put down less than 10 percent, you're generally stuck paying mortgage insurance for the life of the loan unless you refinance into a conventional mortgage.
That's a big reason so many FHA borrowers have been looking at refinancing lately.
To get started, pull your latest mortgage statement and find your current loan balance, then check your original loan documents for the home's value at purchase.
Divide your balance by that value to get a rough loan-to-value.
If you're near or below 80 percent, call your servicer and ask specifically about their PMI removal process.
Get the requirements in writing, ask whether they need an appraisal, and find out the exact date your request can be submitted.
Also worth checking: your annual escrow statement and any recent servicer notices.
Some companies bury PMI cancellation eligibility information in fine print rather than flagging it for you, because the insurance protects them, not you.
If your servicer transfers your loan, the clock and paperwork can get messy, so keep copies of everything you send.
The bottom line is that PMI removal isn't automatic for most people at the 80 percent mark — you have to ask, and the process rewards borrowers who do a little homework first.
A single phone call and a $500 appraisal could eliminate a payment that's been quietly draining your budget for years.
Final Thoughts
Given how much home values have moved, it's worth checking your numbers this week rather than assuming you're still stuck.