PMI Calculator

Calculate your Private Mortgage Insurance costs, see when PMI will automatically drop off, and understand the total cost of PMI over the life of your loan.

PMI Details

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Annual rate, typically 0.3% - 1.5%

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Ready to Calculate

Enter your home price, down payment, and PMI rate to see your insurance costs and when PMI drops off.

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Pro Tip

Request PMI cancellation as soon as you reach 80% LTV (based on original value or new appraisal). Don't wait for the automatic termination at 78% -- every month of PMI you can avoid saves money.

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Understanding Private Mortgage Insurance (PMI)

Private Mortgage Insurance is a type of insurance that lenders require when borrowers make a down payment of less than 20% on a conventional mortgage. PMI protects the lender -- not the borrower -- against potential losses if the borrower defaults on the loan.

While PMI adds to your monthly housing costs, it enables millions of borrowers to purchase homes with down payments as low as 3-5%. Without PMI, lenders would require 20% down on all conventional loans, making homeownership inaccessible for many buyers.

The cost of PMI varies significantly based on several factors: your credit score (higher scores mean lower rates), the loan-to-value ratio (more equity means lower PMI), and the type of loan. Annual PMI rates typically range from 0.3% to 1.5% of the original loan amount.

The Homeowners Protection Act of 1998 established rules for PMI removal. You can request cancellation at 80% LTV, and lenders must automatically terminate PMI at 78% LTV based on the original amortization schedule. Understanding these milestones helps you plan for when this extra cost will end.

PMI Formula

Monthly PMI Calculation

Monthly PMI = (Loan Amount × Annual PMI Rate) ÷ 12

Where:

Loan Amount = Home price minus down payment

Annual PMI Rate = Percentage charged annually (0.3% - 1.5%)

LTV Ratio = Loan Amount / Home Value (must be > 80% for PMI)

Example

For a $400,000 home with 10% ($40,000) down at 0.55% PMI rate:

  • • Loan amount: $400,000 - $40,000 = $360,000
  • • LTV ratio: $360,000 / $400,000 = 90%
  • • Annual PMI: $360,000 x 0.55% = $1,980
  • • Monthly PMI: $1,980 / 12 = $165
  • • PMI drops at 78% LTV: balance of $312,000

Frequently Asked Questions

What is PMI and why do I need it?
Private Mortgage Insurance (PMI) protects the lender if you default on your loan. It's required when your down payment is less than 20% of the home's purchase price. PMI allows borrowers to purchase homes with smaller down payments while protecting lenders from the higher risk.
When does PMI automatically drop off?
By federal law (Homeowners Protection Act), PMI must be automatically terminated when your loan balance reaches 78% of the original home value based on the original amortization schedule. You can also request removal at 80% LTV with a good payment history.
How much does PMI cost?
PMI typically costs between 0.3% and 1.5% of the original loan amount annually. The exact rate depends on your credit score, down payment percentage, loan type, and loan-to-value ratio. Higher risk profiles result in higher PMI rates.
Can I avoid PMI with less than 20% down?
Options include: piggyback loans (80/10/10 structure), lender-paid PMI (built into a higher rate), VA loans (no PMI required), or USDA loans. FHA loans require mortgage insurance premiums (MIP) instead of PMI, which have different rules.
Can I make extra payments to remove PMI faster?
Yes! Extra principal payments reduce your balance faster, helping you reach the 80% LTV threshold sooner. Once you reach 80% LTV, contact your lender to request PMI removal (you may need a new appraisal).