A modest down payment on a home will help you make a purchase with your available savings, but you'll also find yourself saddled with the extra monthly cost of private mortgage insurance. Naturally, you'll want to eliminate these payments from your loan as soon as possible.

Private mortgage insurance is designed to protect lenders when a buyer purchases a home with less than 20 percent of the sales price as a down payment. Ilona Bray, writing for the legal site Nolo, says private mortgage insurance guards against the possibility that a buyer using a smaller down payment will default on their loan and cause the property to go into foreclosure. The buyer pays the premiums on the private mortgage insurance policy, and the cost varies depending on the borrower's credit score.

Aside from allowing a buyer to purchase their desired home with less than one-fifth of the sales price, private mortgage insurance benefits the lender rather than the borrower. Jean Folger, writing for the financial site Investopedia, says the insurance typically amounts to 0.5 percent to 1 percent of your mortgage each year. That means you can spend nearly $167 a month for private mortgage insurance on a $200,000 loan.

When looking for a home, you should keep private mortgage insurance in mind. Tasha Schroeder, writing for the National Association of Realtors, says you might only consider homes where you can afford to make a down payment of 20 percent of the sales price. You can also ask for an 80-10-10 arrangement, or piggyback mortgage, where you make a 10 percent down payment and take out one loan for 80 percent of the mortgage and another for the remaining 10 percent.

If you are paying private mortgage insurance, you'll simply have to make your regular payments until you reach a point where you can eliminate this requirement. Bray says it may take some time to achieve this goal, since early mortgage payments will go more toward the interest than the principal. Holden Lewis, writing for the financial site Bankrate, says putting some extra money toward the principal each month can help you pay down your balance faster.

Once you have paid 20 percent of your home's sale price, you can request that the private mortgage insurance be terminated. The Consumer Financial Protection Bureau says federal law allows you to make this request if you have kept up with your payments and closed on your home on or after July 29, 1999.

Your mortgage documents should include a private mortgage insurance disclosure informing you when you are expected to pay off 20 percent of your loan. You can also contact your lender to get this date.

When you hit this milestone, you can send a written request to your lender asking them to cancel the private mortgage insurance. Your lender may say they are only able to fulfill this request if you do not have any other outstanding loans, such as a second mortgage.

Your loan-to-value ratio may affect how quickly you can rid yourself of private mortgage insurance. For example, borrowing $180,000 on a $200,000 home gives you a loan-to-value ratio of 90 percent. Reducing the principal by $20,000 will put the loan-to-value ratio at 80 percent, meaning you have paid off 20 percent of your home's value and are able to terminate your private mortgage insurance.

However, you may find that you still have to retain private mortgage insurance if your home has declined in value. If you knock $20,000 off the principal but the value of your home falls to $180,000, your loan-to-value ratio will be at 88.9 percent and you won't be eligible to terminate the private mortgage insurance. For this reason, a lender may require you to show proof that your home has not declined in value since you took out your mortgage before it agrees to end the policy.

On the other hand, increasing property values can allow you to get rid of private mortgage insurance more quickly. If your $200,000 home is worth $212,500 by the time you manage to pay $10,000 of your $180,000 loan, your loan-to-value ratio will reach 80 percent and you'll be able to end the private mortgage insurance.

Certain actions, such as remodeling your home, can help increase its value. Lewis says that if you think your property has appreciated enough to knock out the private insurance mortgage, you might consider getting it appraised. You can use the appraiser's findings in your request to a lender.

Federal law requires lenders to automatically cancel private mortgage insurance at a certain point, even if a borrower does not request this action. Once you have paid off enough of the mortgage that the remaining balance is 78 percent of the price you paid for the home, a lender must cancel the policy. This action is required even if other factors have affected the loan-to-value ratio, such as a decline in the home's current value.

Private mortgage insurance must also be terminated if you are halfway to the point where the loan is scheduled to be paid off. For example, private mortgage insurance must be canceled if you still have it after 7.5 years on a 15-year mortgage, as long as you have been current on your payments. The Consumer Financial Protection Bureau says this condition may be met for balloon payments, loans with an interest-only period, or principal forbearance.

Refinancing may allow you to cancel your private mortgage insurance. Folger says a new loan will let you to pay for 80 percent of your home's value or less if the value has improved, satisfying the necessary condition to eliminate the policy. However, you'll also want to make sure refinancing is the best option for paying off your home.

Some lenders may be slow to respond to your request to cancel private mortgage insurance or even ignore it. Under these circumstances, Bray recommends a follow-up written request to firmly request action. Keep a copy so you have a record of your correspondence. If the lender continues to charge you private mortgage insurance premiums after you are eligible for its termination, you can file a complaint with the Consumer Financial Protection Bureau or pursue action in small claims court.