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 catch is that plenty of borrowers keep paying it long after they've earned the right to stop.
It protects the lender if you default, which is why it feels like a fee you can't escape.
The good news is that federal rules give most homeowners a clear path to cancel it — you just have to know which rules apply to your loan and when to pick up the phone. **Two different sets of rules** If you have a conventional loan backed by Fannie Mae or Freddie Mac, the Homeowners Protection Act spells out exactly when PMI must end.
You can request cancellation once your loan balance drops to 80% of the home's original value, based on the purchase price or appraised value at closing — whichever was lower.
If you'd rather not ask, the servicer must automatically terminate PMI once you hit 78% of that original value, as long as your payments are current.
The formula sounds simple, but the timeline surprises people.
On a 30-year mortgage with 10% down, reaching 80% loan-to-value through normal payments alone can take years longer than most owners expect.
Extra principal payments speed that clock up considerably. **FHA loans play by different rules** If you have an FHA loan, the picture changes.
Borrowers who put down less than 10% generally pay mortgage insurance for the life of the loan unless they refinance into a conventional mortgage.
Those who put down 10% or more can often drop the annual premium after 11 years.
That's a big reason so many FHA borrowers look at refinancing once they've built equity. **What lenders actually require** Cancellation usually isn't automatic at the 80% mark — you have to request it in writing, and your servicer can ask for evidence that the home's value hasn't dropped.
That may mean paying $400 to $700 for an appraisal.
A single missed payment in the prior 12 months, or two in the past 24, can stall a request.
Investment properties and second homes don't qualify for borrower-requested cancellation.
Neither do loans with certain lender-paid insurance arrangements.
And if you've taken out a home equity line of credit, your primary lender may treat it as a second lien and refuse to cancel until it's resolved. **Run the numbers before you call** Pull your latest mortgage statement and find the PMI line item.
Multiply it by 12 to see your annual cost.
Then check your remaining balance against your original home value.
If you're near the 80% threshold, a single extra principal payment could get you there faster than waiting.
Some homeowners in strong markets find their home has appreciated enough that they're already below 80% based on current value.
In that case, a new appraisal can open the door to cancellation even if your loan balance hasn't moved much.
It's a rare situation where spending a few hundred dollars can save thousands. **Our take** PMI is one of the few recurring costs on a mortgage that you can legitimately eliminate without selling or refinancing, yet a lot of people never make the call.
Servicers aren't required to nudge you at the 80% mark, so the burden falls on you.
Final Thoughts
Set a calendar reminder to check your loan-to-value ratio every year — that ten-minute review could put real money back in your pocket.