Millions of American homeowners are quietly paying hundreds of dollars extra every month without realizing 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 catch is that many people keep paying it long after they've earned the right to drop it.
PMI usually runs between 0.3 percent and 1.5 percent of your loan amount each year.
On a $350,000 mortgage, that's roughly $90 to $440 a month, according to mortgage data.
Unlike homeowners insurance, it doesn't protect you at all — it protects the lender if you default.
The good news: there are two clear paths to getting it removed.
Under the Homeowners Protection Act, your servicer must cancel PMI once your loan balance reaches 78 percent of the original home value, as long as your payments are current.
That's based on the original purchase price and your original amortization schedule, not today's market value.
The second path is faster and often overlooked.
You can request cancellation once your balance hits 80 percent of the original value.
Many homeowners reach that point years earlier than they expect, especially if they've made extra payments or the home has appreciated.
You'll generally need a good payment history and may need to confirm you have no second mortgage or home equity line.
If your home's value has jumped since you bought it, you may be able to cancel PMI based on the current appraised value rather than the original price — even if your loan balance is still above 80 percent of what you paid.
That requires a new appraisal, which typically costs $400 to $700, but the math often works in your favor.
Say you bought a $400,000 home with 10 percent down and a $360,000 loan.
If it's now worth $520,000, your balance might already be under 80 percent of the current value.
Dropping a $200 monthly PMI payment could recoup the appraisal cost in three months.
FHA loans have their own requirements, and loans backed by the VA or USDA don't carry PMI in the first place.
If you're not sure what you have, check your mortgage statement or call your servicer and ask directly: "What are my PMI removal requirements?" A few practical steps can speed things up.
Make extra principal payments when you can, since every dollar lowers your balance faster.
Keep written records of your request and follow up in writing if you don't hear back within 30 days.
And if your servicer drags its feet, you can file a complaint with the Consumer Financial Protection Bureau.
One warning: don't stop paying PMI on your own.
It has to be formally canceled, or you risk late fees or damage to your credit.
Get confirmation in writing before you adjust your budget. **Our take:** PMI is one of the few recurring costs on a mortgage that you can legitimately eliminate, and far too many homeowners never make the call.
Final Thoughts
Spending 20 minutes checking your loan balance and home value could put real money back in your pocket every month.