Millions of American homeowners are quietly handing their lender an extra $100 to $300 every month, and many of them no longer have to.
It's called private mortgage insurance, or PMI.
Lenders typically require it when you put down less than 20 percent on a conventional loan.
The logic is simple: if you default, the insurer covers part of the lender's loss.
But once you've built enough equity, that safety net stops being the lender's problem and starts being yours.
The catch is that PMI doesn't remove itself.
In most cases, you have to ask — and the rules about when you're allowed to ask are more specific than most homeowners realize.
Once your mortgage balance drops to 80 percent of the home's original value, you can request cancellation in writing.
The second is 78 percent, at which point the lender must automatically terminate PMI under the Homeowners Protection Act — but only if you're current on payments.
Those percentages are based on the original value of the home or the original purchase price, not today's market value.
That distinction matters in a hot market.
If your home has appreciated sharply, you may be sitting well below 80 percent LTV on paper but still paying PMI because your loan balance hasn't caught up to the original number.
Many lenders will let you request a PMI cancellation based on current market value if you pay for an appraisal, typically a few hundred dollars.
Run the math first: if you're paying $150 a month in PMI, a $500 appraisal pays for itself in about three and a half months.
If you're paying $40, the math gets tighter.
Lenders generally won't cancel PMI if you've been more than 30 days late in the past 12 months, or more than 60 days late in the past two years.
If you've had a rough stretch, getting current and waiting out the clock may be the fastest path.
There's also a split-loan trap worth knowing about.
If you used an 80-10-10 piggyback structure to avoid PMI, you may instead be paying higher interest on a second mortgage.
That's not PMI and can't be canceled the same way — but it can often be refinanced or paid down.
FHA loans follow different rules entirely.
On most FHA loans with less than 10 percent down, mortgage insurance lasts for the life of the loan unless you refinance into a conventional product.
That's a real cost that doesn't go away on its own, and it's one reason some FHA borrowers eventually look at refinancing once they have enough equity.
For anyone with a conventional loan, the practical move is straightforward.
Find your closing documents and confirm the original value and loan amount.
Check your current balance on your latest statement.
If you're near 80 percent, call your servicer and ask exactly what they require — some want a written request, some want an appraisal, and some have their own internal thresholds.
A single phone call and a short letter can free up real money every month, and unlike a refinance, it doesn't reset your rate or your term.
The takeaway: PMI is temporary by design, but only if you treat it that way.
Final Thoughts
Lenders have no incentive to remind you when the clock runs out.