Legally, the lender can hold the borrower liable for the premium on the private mortgage insurance policy until the value of the home reaches 78% of the loan-to-ratio value. Once that obligation has been met, the lender will probably require that the home be appraised again to make sure the insurance is no longer needed.

However, if the home buyer's credit score is good and all the payments are current, there is another option. He or she may be able to petition to have the private mortgage insurance removed when 20% of the home's value has been paid by the borrower.

Exceptions to these two allowances for termination of the private mortgage insurance may not be allowed on loans that are considered to be high risk by the lender. Another situation which may influence whether the lender allows for termination of the policy may be the presence of other liens on the land and/or the home.

Many considerations go into the buying of a home. If the home buyer has less than 20% down payment, he or she needs to be prepared for this to be one of those considerations. Just as property taxes and home owner's insurance are part of the home owner's future, so private mortgage insurance is part of the home buyer's assortment of tasks to be dealt with as they look into the details of their new purchase.

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