PMI Calculator
Estimate your monthly private mortgage insurance payment based on your loan amount and PMI rate. Use this when your down payment is less than 20% of the home price and your lender requires PMI.
About this calculator
Private mortgage insurance (PMI) protects the lender if a borrower defaults on their home loan. Lenders typically require PMI when the loan-to-value (LTV) ratio exceeds 80%, meaning the borrower put down less than 20%. The monthly PMI cost is calculated using the formula: Monthly PMI = (Loan Amount × (PMI Rate / 100)) / 12. PMI rates typically range from 0.2% to 2% of the original loan amount per year, depending on your credit score, loan type, and down payment size. Once your equity reaches 20% of the home's value, you can typically request PMI cancellation. Understanding your PMI cost upfront helps you budget accurately and decide whether a larger down payment makes financial sense.
How to use
Suppose you are buying a home with a loan amount of $280,000, and your lender assigns a PMI rate of 0.85%. Enter $280,000 as the Loan Amount and 0.85 as the PMI Rate. The calculator computes: ($280,000 × (0.85 / 100)) / 12 = ($280,000 × 0.0085) / 12 = $2,380 / 12 = $198.33 per month. This means you will pay approximately $198 each month in PMI on top of your principal, interest, taxes, and homeowner's insurance until your LTV drops below 80%.
Frequently asked questions
How long do I have to pay PMI on a conventional loan?
You are required to pay PMI until your loan-to-value ratio drops to 80% of the home's original appraised value. At 78% LTV, federal law (the Homeowners Protection Act) requires the lender to automatically cancel PMI. You can also request cancellation once you reach 80% equity through payments or appreciation, though the lender may require a new appraisal. Making extra principal payments or benefiting from rising home values can shorten the PMI period significantly.
What is a typical PMI rate and what factors affect it?
PMI rates generally range from 0.2% to 2% of the loan amount annually. Your exact rate depends on several factors, including your credit score, loan-to-value ratio, loan type, and the size of your down payment. Borrowers with higher credit scores and a 15% down payment will pay less than those with fair credit and a 5% down payment. Shopping for lenders and improving your credit before applying can help you secure a lower PMI rate.
Is PMI tax deductible and how can I avoid paying it?
PMI deductibility has varied under U.S. tax law and is subject to income phase-outs, so you should consult a tax professional for current rules. To avoid PMI entirely, you can make a 20% or larger down payment. Alternatively, some borrowers use a piggyback loan (an 80-10-10 structure) where a second mortgage covers part of the down payment, eliminating the need for PMI. Lender-paid PMI is another option, but it usually comes with a higher interest rate instead.