Millions of American homeowners are quietly handing over an extra $100 to $300 every month, and many of them don't have to.
It's called private mortgage insurance, or PMI, and it's usually required when you put down less than 20% on a home.
The good news: there are clear, rule-based ways to get rid of it, and a surprising number of people never bother to ask.
Once you've built enough equity, the lender no longer needs that cushion, which means you can often cancel the charge and keep the difference.
On a $350,000 loan, dropping a $200 monthly PMI payment adds up to $2,400 a year back in your pocket.
The fastest path is the borrower-requested cancellation.
For conventional loans, you can typically ask your servicer to drop PMI once your loan balance reaches 80% of the home's original value.
That's based on the original purchase price or appraised value at closing, not today's market.
You'll generally need a good payment history and may have to confirm the home's value.
Here's the catch that trips people up: reaching 80% often takes years because most of your early payments go toward interest.
On a 30-year loan, you may not hit that threshold until year seven or later.
If home values in your area have climbed, a new appraisal could get you there much sooner, though you'd pay a few hundred dollars for it and it doesn't always pencil out.
Under federal law for conventional loans, servicers must cancel PMI on the date your balance is scheduled to hit 78% of the original value, as long as you're current on payments.
If you're behind, the clock can pause, so staying current matters.
If you have an FHA loan, the rules are tougher.
Many FHA loans opened after mid-2013 carry mortgage insurance for the life of the loan unless you refinance into a conventional loan.
That's a big reason some borrowers look at a refinance once they've built equity, though today's higher rates mean the math doesn't work for everyone.
A few practical steps can speed things up.
Check your latest mortgage statement or call your servicer and ask two questions: what's my current loan-to-value, and what's your specific process for removing PMI?
Then run the numbers on an appraisal versus just waiting.
Even $50 or $100 a month can shave months or years off the timeline to 80%, which means you hit the PMI exit sooner.
Just confirm your servicer applies extra money to principal, not to next month's payment, or you'll get no benefit.
One last warning: be wary of third-party companies that charge a fee to "handle" your PMI removal.
You can do this yourself for free by contacting your loan servicer directly.
Anyone demanding upfront payment to cancel PMI is a red flag.
PMI is often temporary, but it won't disappear on its own unless you qualify for the automatic 78% rule.
Final Thoughts
A five-minute call to your servicer could be the highest-paid five minutes of your month, and the savings land in your budget every single month after that.