Private mortgage insurance protects the lender(not you) if you default on your mortgage. It's required on conventional loans when your down payment is less than 20% of the home's purchase price. PMI typically costs 0.5%–1.5% of the loan amount annually, added to your monthly payment.

On a $350,000 loan at 0.85% PMI, you're paying about $248 per month purely to insure the lender's risk. Over the years until you reach 20% equity, that adds up to thousands of dollars. The good news: unlike FHA mortgage insurance, conventional PMI is temporary. Once you build enough equity, you can get rid of it.

1. Request removal at 80% LTV. Once your loan balance drops to 80% of the originalproperty value (or current appraised value in some cases), you can write to your lender requesting PMI cancellation. You must be current on payments and may need to pay for a new appraisal ($300–$500).

2. Automatic cancellation at 78% LTV. Under the Homeowners Protection Act (HPA), your lender mustautomatically cancel PMI when your balance reaches 78% of the original purchase price, based on the original amortization schedule. You don't need to do anything, but many borrowers don't realize they can request removal 2% sooner.

3. Refinance. If your home has appreciated 10%+ since purchase, refinancing into a new loan at or below 80% LTV can eliminate PMI entirely. This approach makes sense when rates have dropped or your home value has risen enough that the savings outweigh refinancing costs.

Make extra principal payments. Even an extra $200/month toward principal can shave years off your PMI timeline. Use our calculator above to see the "lump sum to reach 80%" amount. If you have that cash available, you can eliminate PMI immediately.

Get a new appraisal.If your home has appreciated since purchase (renovations, market growth), a new appraisal could show a current value that puts your LTV below 80%. Some lenders allow cancellation based on current value rather than original purchase price, especially if you've owned the home for 2+ years.

Home improvements that add value. Kitchen and bathroom renovations, adding a bedroom, or finishing a basement can increase your appraised value. Focus on improvements with high return-on-investment in your market.

• Mortgage Payment Calculator to calculate your full monthly payment including PMI, taxes, and insurance.
• Refinance Calculator to see if refinancing makes sense to eliminate PMI and lower your rate.
• Extra Payment Calculator to calculate how extra payments can help you reach 80% LTV faster.