Beginning in 1999, lending institutions have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for loans made after July of that year) goes beneath seventy-eight percent of the price of purchase, but not at the point the borrower's equity gets to higher than twenty-two percent. (There are some loans that are not included -like a number of "high risk' loans.) But if your equity rises to 20% (no matter what the original price was), you have the legal right to cancel your PMI (for a mortgage closed past July 1999).
Familiarize yourself with your loan statements to keep a running total of principal payments. You'll want to keep track of the the purchase amounts of the houses that sell around you. If your mortgage is under five years old, chances are you haven't paid down much principal - you have been paying mostly interest.
Once you find you've achieved at least 20 percent equity in your home, you can begin the process of getting PMI out of your budget. You will need to contact the lender to alert them that you wish to cancel PMI. Next, you will be asked to submit proof that you are eligible to cancel. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will document your equity amount - and almost all lenders will require one before they'll cancel PMI.