If the deposit on your home is less than 20% of the purchase price, private mortgage insurance (PMI) will be added to your monthly mortgage costs by your lender.
PMI is typically required for borrowers who’ve made smaller down payments to offset the lender’s financial risk. This is so the lender can offer affordable mortgage options to people who don’t have the cash to make a traditional 20% down payment.
Once your home equity reaches 22%, your PMI payments will automatically stop. To stop PMI payments sooner, when your home equity reaches 20%, simply ask your lender to stop the PMI payments.