If you bought a home in the last few years with less than 20 percent down, you've probably been paying private mortgage insurance every month — often $100 to $300 that does nothing for your equity.
The good news: it may be easier to get rid of that payment than you think.
Private mortgage insurance, or PMI, is typically required when your down payment is under 20 percent.
Lenders charge it because you're considered a higher risk.
But once you've built enough equity, you have the right to ask for it to be removed — and new guidelines from mortgage giants Fannie Mae and Freddie Mac have made that path clearer.
Here's the key number to remember: 80 percent.
Once your loan balance drops to 80 percent of your home's original value, you can request PMI cancellation.
You don't have to wait for the lender to do it automatically.
The catch is that you generally need a clean payment history — typically no 30-day late payments in the past 12 months, and no more than one in the past two years.
Lenders may also require a current appraisal to confirm your home hasn't lost value.
That appraisal can cost $400 to $700, so run the math before you request one.
If you've made improvements or your local market has climbed, you might hit that 80 percent threshold faster than your original schedule suggested.
A quick call to your loan servicer can tell you where your loan-to-value ratio stands today.
Under federal law, servicers must cancel PMI on their own once you reach 78 percent loan-to-value based on your original payment schedule, as long as you're current on payments.
That's the no-action-required date — but waiting for it can mean paying hundreds more than necessary.
For borrowers with FHA loans, the rules differ.
FHA mortgage insurance premiums often last for the life of the loan if you put down less than 10 percent, and the only way out is refinancing into a conventional loan.
That's a much bigger decision and worth a conversation with a loan officer.
One more thing worth checking: some loans — particularly certain "lender-paid" mortgage insurance arrangements — have different rules buried in the fine print.
Read your closing documents or ask your servicer directly.
With mortgage rates still elevated and home values flat or falling in some markets, plenty of homeowners are looking for any monthly savings they can find.
Trimming a PMI payment won't change your rate, but it can free up real money in your budget every month.
Our take: this is one of the few household money moves that's mostly paperwork and phone calls, not a refinance or a big gamble.
If you're anywhere near 20 percent equity, pick up the phone this week and ask for your loan-to-value number in writing.
Final Thoughts
The worst answer you'll get is "not yet" — and the best one saves you a few hundred dollars a year.