The ability to cancel Private Mortgage Insurance is conditioned upon what criteria?

The ability to cancel Private Mortgage Insurance (PMI) is primarily conditioned upon the amount of equity that a borrower has in the property. When a borrower reaches a certain level of equity, typically 20% of the home's original value, they may be eligible to request the cancellation of PMI. This is because PMI is usually required for loans that have a down payment of less than 20%, as it protects the lender in case of default. When equity increases, it indicates that the homeowner is less risky to the lender, allowing for the potential removal of this insurance requirement.

As such, if the equity in the property increases due to mortgage payments reducing the principal balance or an increase in property value, the borrower can often make a request to cancel PMI once they've reached this equity threshold. Understanding this relationship is crucial for borrowers looking to save on their monthly mortgage expenses, as PMI can represent a significant additional cost to their mortgage payments.