If you bought a home in the last few years with less than 20 percent down, there's a decent chance you're paying for private mortgage insurance every month without thinking much about it.
That extra line item—usually tucked into your escrow payment—can run $100 to $300 a month, and a lot of homeowners assume it just sticks around until they sell or refinance.
There's a federal law that forces your lender to drop it once you hit certain thresholds, and you may be able to cancel it even sooner.
PMI exists because lenders see a down payment under 20 percent as a bigger risk.
If you default, they want someone else covering part of the loss.
So you pay a premium, and the lender stays protected.
The good news: as your home value rises and your balance falls, that risk shrinks—and so should your payment.
Once your loan balance reaches 80 percent of your home's original value, you can formally request that your servicer cancel the PMI.
That's called borrower-requested cancellation, and under the Homeowners Protection Act, your lender has to honor it if you're current on payments and have a good payment history.
You'll usually need to make the request in writing, and some servicers want proof of value—sometimes a broker's price opinion or appraisal you may have to pay for.
At 78 percent loan-to-value based on the original purchase price and your original amortization schedule, your servicer must drop PMI on its own—no request needed.
If you've been paying on time for years and never asked, you might have already crossed that line and still be getting charged.
Call your servicer and ask where your loan-to-value stands.
Here's where it gets interesting for anyone who bought before 2021.
Home prices in many markets jumped hard, so your current value may be well above what you paid.
That means you could hit 80 percent LTV based on today's value long before your balance actually falls that far.
A new appraisal can cost a few hundred dollars, but if it wipes out $150 a month in PMI, it pays for itself in a couple of months.
If you have an FHA loan, the rules are different—FHA mortgage insurance often lasts the life of the loan unless you refinance into a conventional mortgage.
If you've had late payments, missed payments, or a bankruptcy, your servicer can deny a cancellation request.
And if your loan is owned by Fannie Mae or Freddie Mac, you can sometimes use their automated valuation tools instead of paying for a full appraisal.
The simplest first step costs nothing: pull your latest mortgage statement, find the PMI line, and call your servicer.
Ask three questions—what's my current loan-to-value, what's the process to cancel PMI, and what documentation do you need.
If they push back, ask for the specific reason in writing and escalate to a supervisor.
This is one of the few money moves where a single phone call can hand you back a couple thousand dollars a year.
Most people never make it because they assume the bank will handle it.
The automatic drop at 78 percent does happen, but it can take years longer than necessary if you're sitting on equity you haven't documented.
Final Thoughts
Check your numbers, make the call, and stop paying for insurance you may no longer need.