Private mortgage insurance quietly drains hundreds of dollars from millions of American homeowners every month, and many of them have no idea they can make it stop.
PMI typically gets tacked onto conventional loans when buyers put down less than 20 percent, protecting the lender if the borrower defaults.
Once enough equity builds up, that insurance is no longer required — but servicers rarely rush to remove it.
The rules come in two flavors: borrower-requested removal and automatic termination.
Federal law under the Homeowners Protection Act requires lenders to cancel PMI automatically once you reach 22 percent equity based on the original home value and payment schedule.
You can request removal earlier, at 20 percent, but that path comes with conditions most people learn about the hard way.
Those conditions are where homeowners get tripped up.
Your request generally must be in writing, your payment history must be current with no recent delinquencies, and some servicers want proof the home hasn't lost value.
Certain loans also require a new appraisal — and you may have to pay for it upfront, often $400 to $700.
Here's the part that matters most right now: rising home values have pushed millions of borrowers past the 20 percent threshold far faster than their original amortization schedules predicted.
If you bought in 2021 or 2022 with a small down payment, there's a real chance you're already eligible and simply don't know it.
That's money you could redirect toward higher-interest debt or savings.
Pull your latest mortgage statement and find the PMI line item, then call your servicer and ask two questions: what's my current loan-to-value ratio, and what exactly do you need to remove PMI?
If an appraisal is required, ask whether a broker price opinion or automated valuation model would be accepted instead — many servicers allow cheaper alternatives.
Under the law, your servicer must automatically terminate PMI when you hit 22 percent equity, and it must drop the requirement at the midpoint of your loan term regardless of equity — usually 15 years on a 30-year loan.
If you're approaching either milestone, watch your statements closely.
Errors happen, and refunds aren't automatic.
For homeowners who bought at low rates and have no plans to refinance, removing PMI is one of the few ways to lower your monthly payment without touching your interest rate.
On a $350,000 loan, PMI commonly runs 0.5 to 1.5 percent of the loan amount annually — that's roughly $145 to $440 a month.
Our take: PMI removal is one of the most overlooked money moves in personal finance, and servicers have little incentive to remind you.
Set a calendar reminder to check your equity every six months, keep your payment history spotless, and be ready to push back if your lender drags its feet.
Final Thoughts
A few phone calls could put hundreds of dollars back in your pocket each month.