Millions of American homeowners are paying hundreds of dollars a month for private mortgage insurance without realizing they may have already earned the right to cancel it.
PMI is the extra fee lenders charge when your down payment was under 20 percent.
It protects the lender, not you, if you default.
Once you've built enough equity, you can ask to have it removed, and the rules are more specific than most people know.
The magic number most buyers hear is 80 percent.
In plain terms, you generally need your loan balance to fall to 80 percent of the home's original value before you can request cancellation.
On a $400,000 purchase with 10 percent down, that means paying the loan down to roughly $320,000.
Depending on your rate and schedule, that can take years, and it won't happen automatically at the stroke of midnight.
Under the Homeowners Protection Act, your servicer generally must cancel PMI automatically once you reach 22 percent equity based on the original value, provided your payments are current.
Your lender also has to give you an annual notice spelling out your cancellation rights.
If you've never seen that notice, dig through your statements or call your servicer directly.
Getting rid of PMI isn't a phone call and a handshake.
Most lenders require a written request, a good payment history, and proof of value.
Many will demand a new appraisal, which you pay for out of pocket, typically a few hundred dollars.
Some loans, especially FHA loans with certain terms, carry mortgage insurance for the life of the loan unless you refinance.
That's a critical distinction that catches people off guard.
A hot housing market can work in your favor.
If your home's value jumped since you bought it, a new appraisal might push you past the 20 percent threshold even if your loan balance hasn't moved much.
If values slid in your area, you could be stuck paying PMI longer than you planned, which is a risk nobody advertises at closing.
PMI often runs between 0.3 percent and 1.5 percent of your original loan amount per year, split into monthly payments.
On a $360,000 loan, that's roughly $90 to $450 a month, money that does nothing for your equity.
Over a couple of years, that's a used car or a solid emergency fund.
So why doesn't every eligible homeowner cancel?
Servicers collect the premium, and nobody is required to proactively cancel at 80 percent.
You have to do the work, pay for the appraisal, and follow up, sometimes more than once.
Consumer advocates have pushed for years to make this process simpler, with limited success.
If you're paying PMI, pull your latest statement and find the number.
Compare your balance to 80 percent of your original value.
If you're close, call your servicer and ask exactly what they need.
If you're far away, consider whether extra principal payments speed up the timeline, or whether a refinance makes sense given current rates.
Run the math before you assume it's not worth it.
One more thing worth checking: your credit score and payment history matter here.
Late payments can delay or block cancellation even if your equity qualifies.
Scammers know this anxiety well, so be wary of any company promising to "eliminate PMI fast" for an upfront fee.
You can do this yourself for free, minus the appraisal.
The bottom line: PMI is a temporary cost that too often becomes permanent out of habit.
Lenders have little incentive to remind you, so the reminder has to come from you.
Final Thoughts
Set a calendar date, check your equity, and make the call.