PMI Calculator: Monthly Cost and When It Ends
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Private mortgage insurance (PMI) is usually required on a conventional loan with less than 20% down. It typically costs 0.3% to 1.5% of the loan each year, and you can ask to remove it once your balance reaches 80% of the home’s original value.
With 10.0% down on a $400,000 home, you borrow $360,000 and pay about $180.00 a month in PMI at 0.60%. Your balance reaches 80% of the original price in about 7 years 11 months, so you would pay roughly $17,100 in total PMI.
Show the steps
- Loan: $400,000.00 × (1 − 10.00%) = $360,000.00. Loan-to-value 90.00%.
- Monthly PMI: $360,000.00 × 0.600% ÷ 12 = $180.00.
- PMI can be removed when the balance reaches 80% of the original price: $320,000.00. At $2,275.44 a month that takes 95 months.
- By law it ends automatically at 78% ($312,000.00) on the original schedule: month 109.
Months until the balance hits a target T
k = ln((p ÷ r − T) ÷ (p ÷ r − L)) ÷ ln(1 + r)
L = loan, p = monthly payment, r = monthly rate
- PMI rates depend on your credit score, loan-to-value and loan type. Use the rate on your loan estimate.
- This applies to conventional loans. FHA loans use mortgage insurance premiums (MIP) with different rules. Use the FHA loan calculator.
- A home appraisal showing higher value can also let you drop PMI sooner, if your lender agrees.
Estimates for planning and learning, not financial, tax, legal or medical advice. Check figures with your lender, tax preparer or doctor before you act.
About this calculator
PMI protects the lender, not you, but you pay for it. Because it adds to your monthly bill, it is worth knowing how big it is and how long it lasts.
This calculator estimates your monthly PMI and shows when your loan balance falls to 80% of the original price (when you can request removal) and 78% (when your servicer must end it automatically). You can add extra principal payments to see how much sooner PMI ends.
How to use it
- Enter the home price and the down payment as a percent.
- Enter the interest rate and loan term.
- Enter the PMI rate from your loan estimate, or leave the typical default.
- Open the options to add an extra monthly principal payment.
- Read the monthly PMI, the removal timeline and the total cost.
How to get rid of PMI
- Put 20% down, so PMI is not needed.
- Request cancellation when your balance reaches 80% of the original value, if you are current on payments.
- Wait for automatic termination at 78% of the original value.
- Refinance when your home has gained value and your loan is under 80% of the new value.
PMI versus FHA mortgage insurance
FHA loans use mortgage insurance premiums, which can last for the whole loan. PMI on conventional loans can be removed. For a low credit score, an FHA loan may still cost less.
Sources
Quick check: test yourself
What does PMI usually protect?
Correct answer: The lender. Private mortgage insurance pays the lender if you default, though you pay the premium.
At what loan-to-value can you request that PMI be removed?
Correct answer: 80%. You can ask your servicer to cancel once your balance reaches 80% of the original value.
PMI of 0.6% a year on a $300,000 loan costs how much each month?
Correct answer: $150. $300,000 × 0.006 ÷ 12 = $150.
Pick an answer for each question.
Common questions
How much does PMI cost?
Usually 0.3% to 1.5% of the loan amount each year. Higher credit scores and larger down payments get lower rates.
When does PMI go away?
You can request removal when your balance reaches 80% of the original value. It ends automatically at 78%, if you are current on your payments.
Do I need PMI with 20% down?
No. PMI is normally required only when you put down less than 20%.
Is PMI tax deductible?
The deduction has been available only in some years. Ask a tax professional about the current rules.
Does extra payment help remove PMI sooner?
Yes. Extra principal lowers your balance faster, so you reach 80% sooner.
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