One piece of information from the episode surprises a lot of people: you don't need 20% down to buy with a conventional mortgage. Products exist starting at 3%. What changes isn't the right to buy — it's the monthly cost, because of the insurance.

This piece explains what that insurance is, how long it lasts and how not to pay it for longer than necessary. It's money leaving the account every month, and plenty of people keep paying it without needing to.

Why the insurance exists

Financing 97% of a house is a bigger risk for the bank than financing 80%. If the property is repossessed and sold for less than the debt, someone has to cover the gap. PMI is that coverage — paid by the buyer, for the lender's benefit.

That's why it disappears when the risk drops: as the debt shrinks and the owner's equity grows, the protection stops making sense.

The two milestones you need to remember

• 80% — you can ask. When the outstanding balance reaches 80% of the property's original value (in other words, when you have 20% equity), you can request in writing that PMI be canceled. It's a request, not automatic: if you don't ask, you keep paying.
• 78% — the bank is required to. Once you reach 78% of the original value, cancellation is automatic by law, provided payments are current.

That's exactly the mechanism described on the episode — ask once you hit 20% equity and, letting it run a bit longer, the bank removes it on its own. Pay attention to the benchmark: the percentages are calculated on the original value of the purchase, not on today's market value.

Common conditions for cancellation on request: being current on payments, having no relevant late payments in the recent history, having no second mortgage on the property and, depending on the case, presenting an updated appraisal.

And if the house went up in value?

This is where the California market's particularity comes in. If the property appreciated significantly, you can have 20% equity long before the balance drops by 20% — because the math changes when you use the current value instead of the original one.

In that case the cancellation isn't the automatic one in the law: it's a request based on appreciation, which usually requires a new appraisal paid by the owner and follows the lender's criteria, including a minimum time since the purchase. It's worth asking the bank — the appraisal costs a few hundred dollars and the insurance can cost that much in a few months.

Careful: FHA doesn't work this way

FHA's insurance (MIP) follows another rule. On most loans with less than 10% down, it stays with the mortgage until the end, with no automatic cancellation upon reaching equity. The usual way out is refinancing into a conventional when the profile allows. Confusing the two regimes is an expensive planning mistake.

What to do in practice

Write down the date when the balance is projected to reach 80% of the original value — the bank provides that projection at closing. Set a reminder. When you get there, request cancellation in writing and keep the confirmation. If the house appreciated well before that, ask right away about cancellation based on appreciation.

This text is informational and does not replace legal, accounting or licensed mortgage professional advice. Rules, figures and rates change; confirm the current version before any decision.

Sources and verification

• Cadê Moradia episode with Rafael Na (June 2026) — explanation of the 3% down payment, the insurance charge and the milestones for requesting and for automatic cancellation.
• Homeowners Protection Act of 1998 — the right to request PMI cancellation at 80% of the original value and the obligation of automatic cancellation at 78%.
• FHA MIP insurance rules — it stays for the life of the loan in most cases with less than 10% down.
• Criteria for cancellation based on appreciation — each lender's policy, generally with an updated appraisal.

Watch this part of the episode:

The secret of mortgage insurance (PMI) and how to eliminate it automatically — starting at 17:15 · CADÊ BRAZIL