Private Mortgage Insurance (PMI) makes it possible for you to buy a home with less than a 20% down payment by protecting the lender against the additional risk associated with low down payment lending. The PMI insurance premium is based on the loan-to-value ratio and is included in your monthly payment.
On a 1-unit primary residence or second home, federal regulations require that PMI be automatically cancelled when your loan balance reaches 78% of the original property value at the time the loan was secured. Depending on the loan program, you may be able to request in writing that PMI be removed sooner, based on an increase in the property value as determined by a new appraisal to be ordered by the servicer. Generally, PMI must have been in place for at least two years and you must have a good payment history for PMI to be cancelled under this scenario.