Is it mandatory that a lender allow PMI to be cancelled on a multi-unit property?

As long as it's owner-occupied and has 4 or fewer units the PMI must be dropped once you have paid down enough principal to reach 20% equity. The date that that will occur will be shown in the contract based solely upon the amortization schedule. To get it removed sooner (say based upon property value appreciation)_ you have to pay for a professional appraisal yourself and request removal. The lender can deny it if they don't believe the appraisal to be accurate so it's often wise to wait until your equity based upon FMV is around 25%or so. The Catch-22 in today's market is that you'll probably hit the 20% equity stake based upon the amortization schedule sooner than you will through property appreciation.