Millions of American homeowners are quietly handing over an extra $100 to $300 every month, and many of them have no idea they can make it stop.
It's called private mortgage insurance, or PMI, and it typically gets tacked onto conventional loans when a buyer puts down less than 20 percent.
The good news: there's a specific moment when lenders are required to let you off the hook — if you know the rules.
It protects the lender, not you, in case you stop paying.
But once you've built up enough equity, that protection no longer makes sense for anyone but the bank's bottom line.
Your job is to prove you've crossed the threshold and ask for it in writing.
The magic number most homeowners hear is 20 percent equity.
Under the Homeowners Protection Act, your servicer must automatically cancel PMI once your loan balance drops to 78 percent of the home's original value — based on your original payment schedule, not today's market price.
That automatic cutoff applies to loans that are current and in good standing.
You don't have to wait for the automatic drop, though.
You can request cancellation once you hit 20 percent equity, which is 80 percent loan-to-value.
That means picking up the phone or logging into your servicer's portal and formally asking.
Some lenders also let you cancel earlier if you've made major improvements that raise the home's value — but that usually requires a new appraisal, which you'll pay for out of pocket.
If you bought in 2021 or 2022 when prices were climbing, your home may now be worth far more than you paid.
A fresh appraisal could push your loan-to-value below 80 percent overnight, even if you haven't paid down much principal.
In that case, the appraisal fee — often $400 to $700 — can pay for itself in just a few months of eliminated PMI.
Your account generally needs to be current, with no missed payments in the last 12 months for a borrower-requested cancellation.
If you have a second mortgage or home equity line, some servicers count that against your equity calculation.
And FHA loans play by different rules entirely — many still carry mortgage insurance for the life of the loan unless you refinance into a conventional product.
Your servicer must also give you an annual statement showing whether you can cancel, plus a phone number to call.
If you've never noticed that notice, dig through your mail or check your online account.
It's a required disclosure, and it's your roadmap.
The fastest path is usually a short letter or portal request stating you want PMI removed, along with proof you've reached 80 percent LTV.
If your servicer drags its feet, you can escalate to the Consumer Financial Protection Bureau.
Lenders tend to move quickly once a regulator is copied.
For homeowners sitting on years of appreciation, a refinance is another route — but with today's rates, run the math carefully.
Trading a low pandemic-era rate for a slightly lower monthly payment without PMI rarely adds up.
Canceling PMI on your existing loan keeps your rate intact, which is almost always the better deal.
Our take: if you're paying PMI right now, spend 15 minutes this week finding your loan-to-value and your servicer's cancellation rules.
Final Thoughts
That small bit of homework could put a couple hundred dollars back in your pocket every month — money that belongs to you, not your lender.