PMI Calculator
Calculate your Private Mortgage Insurance (PMI) costs and when you can remove it
PMI Cancellation Timeline
| Description | Amount | Details |
|---|
About PMI
Private Mortgage Insurance (PMI) protects lenders when borrowers make down payments of less than 20%.
Cost: Typically 0.5% to 1.5% of loan amount annually
Removal: Can be removed when LTV reaches 80% (or automatically at 78%)
Avoiding PMI
• Make a 20% down payment
• Use lender-paid PMI (higher interest rate)
• Consider piggyback loans (80-10-10 structure)
• Use VA loans (if eligible) which don't require PMI
How is PMI calculated? PMI typically costs 0.5% to 1.5% of your loan amount per year, divided into monthly payments.
When can I remove PMI? You can request cancellation when your LTV reaches 80% based on original value, or it automatically terminates at 78% LTV.
Does PMI protect me? No, PMI only protects the lender if you default on your loan.
What is Private Mortgage Insurance (PMI)?
Private Mortgage Insurance (PMI) is a type of insurance that protects lenders in case a borrower defaults on their mortgage. It is typically required when a homebuyer makes a down payment of less than 20% of the home’s purchase price. PMI allows borrowers to qualify for a mortgage with a lower down payment but adds an extra cost to their monthly mortgage payments.
How Does a PMI Calculator Work?
A PMI calculator helps borrowers estimate the cost of private mortgage insurance based on factors such as:
Loan Amount
Down Payment Percentage
Credit Score (affects PMI rates)
Loan Type (Conventional, FHA, etc.)
Property Type (Primary residence, investment property, etc.)
The calculator computes the monthly PMI premium and may also show the total PMI cost over the life of the loan.
Key Inputs for a PMI Calculator
1. Home Price
The total purchase price of the property.
2. Down Payment (%)
The percentage of the home price paid upfront (typically 3% to 19.99% for PMI to apply).
3. Loan Term
Usually 15 or 30 years.
4. Interest Rate
The mortgage interest rate affects the loan balance, which influences PMI costs.
5. Credit Score
Borrowers with higher credit scores (700+) may get lower PMI rates.
6. Loan Type
Conventional Loans: PMI is cancellable once equity reaches 20%.
FHA Loans: Require Mortgage Insurance Premium (MIP), which may last the entire loan term.
7. PMI Rate (%)
Typically ranges from 0.2% to 2% of the loan amount annually.
How to Calculate PMI
PMI is calculated as a percentage of the original loan amount and is paid monthly.
PMI Formula:
Example Calculation:
Home Price: $300,000
Down Payment: 10% ($30,000)
Loan Amount: $270,000
PMI Rate: 0.5% annually
When Can You Remove PMI?
Automatic Termination: For conventional loans, PMI must be canceled once the loan balance reaches 78% of the original home value.
Requested Cancellation: If home equity reaches 20%, borrowers can request PMI removal.
Home Appreciation: If the home’s value increases (via market appreciation or renovations), a new appraisal may allow PMI removal.
PMI vs. FHA MIP (Mortgage Insurance Premium)
| Feature | PMI (Conventional Loans) | FHA MIP |
|---|---|---|
| Down Payment | 3% - 19.99% | 3.5% - 10% |
| Cancellation | Can be removed at 20% equity | Usually lasts the entire loan term |
| Upfront Fee | None | 1.75% of loan amount |
| Annual Fee | 0.2% - 2% | 0.45% - 1.05% |
Benefits of Using a PMI Calculator
Estimates Monthly Costs – Helps budget for mortgage payments.
Compares Loan Scenarios – Shows how a larger down payment reduces PMI.
Plans for PMI Removal – Determines when PMI can be canceled.