While lenders have been obligated (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) at the time the loan balance goes under 78% of the purchase price, they do not have to cancel PMI automatically if the loan's equity is above 22%. (There are some exceptions -like some "high risk' loans.) However, if your equity gets to 20% (regardless of the original price of purchase), you can cancel your PMI (for a mortgage that past July 1999).
Verify the numbers
Familiarize yourself with your mortgage statements to keep your eye on principal payments. Also keep track of how much other homes are selling for in your neighborhood. If your loan is fewer than five years old, chances are you haven't greatly reduced principal � it's been mostly interest.
Proof of Equity
When you think you have reached 20 percent equity in your home, you can start the process of getting PMI out of your budget. You will first let your lending institution know that you are asking to cancel your PMI. Lending institutions ask for proof of eligibility at this point. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will be all the proof you need � and almost all lenders request one before they agree to cancel PMI.