For loans closed after July 1999, lenders are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan goes lower than 78 percent of your purchase amount � but not at the point the loan reaches 22 percent equity. (There are some exceptions -like some loans considered 'high risk'.) But you are able to cancel PMI yourself (for loans made after July 1999) at the point your equity reaches 20 percent, without consideration of the original purchase price.
Familiarize yourself with your loan statements to keep your eye on principal payments. Also keep track of what other homes are purchased for in your neighborhood. You've been paying mostly interest if your mortgage loan closed fewer than 5 years ago, so your principal most likely hasn't lowered much.
You can start the process of canceling PMI at the time you calculate that your equity has risen to 20%. You will need to contact your lender to alert them that you wish to cancel PMI. Next, you will be asked to verify that you are eligible to cancel. You can get documentation of your equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lenders before canceling PMI.
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