How PMI is calculated
Private mortgage insurance protects the lender when a conventional loan has less than 20% down. It is charged as a yearly percentage of the loan, paid monthly. Rates commonly fall between 0.3% and 1.5% a year and depend on credit score and down payment.
The formula
Monthly PMI = loan amount × PMI rate ÷ 12
Worked example
A $360,000 loan with a 0.6% PMI rate costs $360,000 × 0.006 ÷ 12 = $180 a month.
How to use this calculator
Enter the home price, your down payment, a PMI rate, the interest rate and the loan term. If you do not know your PMI rate, ask your lender for a quote, because it depends on your credit score and down payment. The PMI calculator then estimates the monthly cost, how long it takes to reach 80% loan-to-value and the total PMI paid by then.
More examples: the same loan at four PMI rates
Each row uses the $360,000 loan from the worked example.
| PMI rate | Monthly PMI | PMI per year |
|---|---|---|
| 0.3% | $90 | $1,080 |
| 0.6% | $180 | $2,160 |
| 1.0% | $300 | $3,600 |
| 1.5% | $450 | $5,400 |
The gap between the lowest and highest rate here is $360 a month, so your rate matters more than any other input.
How long PMI lasts: a full example
Take a $400,000 home with 10% down. The loan is $360,000, which is 90% of the home’s value. At an example rate of 6.5% over 30 years, regular payments bring the balance down to $320,000, or 80% of the original value, after 95 payments. That is about 7 years and 11 months.
At $180 a month, PMI over those 95 months totals $17,100. If you never ask for removal and wait for the automatic end at 78%, the balance has to reach $312,000. That takes 109 payments and costs $19,620. Asking at 80% saves 14 months of PMI, or $2,520.
What changes the result
- PMI rate: a higher credit score or a larger down payment usually means a lower rate.
- Loan amount: PMI is a percentage of the loan, so a bigger loan costs more at the same rate.
- How fast you pay down the loan: extra principal payments reach 80% sooner and cut the total PMI you pay.
- Starting loan-to-value: with 5% down on the same home, the $380,000 loan takes 124 regular payments to reach $320,000, compared with 95 payments at 10% down.
Common mistakes
- Multiplying the PMI rate by the home price instead of the loan amount.
- Expecting PMI to drop off on its own at 80%. You have to ask at 80%. It ends automatically at 78% if your payments are current.
- Measuring 80% against today’s market value. The standard rule uses the home’s original value.
- Mixing up PMI with FHA mortgage insurance, which follows different rules.
Related calculators
See how much cash it takes to reach 20% with the down payment calculator. Test extra payments with the mortgage payoff calculator, and add PMI to your full monthly payment with the mortgage calculator.
Frequently asked questions
When does PMI stop?
You can ask for it to be removed when the balance reaches 80% of the home’s original value. It ends automatically at 78%.
How can I avoid PMI?
Put 20% down, or use a loan type that has no PMI, such as a VA loan.
Is PMI the same as FHA mortgage insurance?
No. FHA loans charge MIP, which has different rules. See the FHA loan calculator.
How much is PMI on a $300,000 loan?
At the common range of 0.3% to 1.5% a year, PMI on a $300,000 loan costs $75 to $375 a month. Your lender’s quote will show your own rate.
Is PMI based on the loan amount or the home price?
The loan amount. On a $400,000 home with 10% down, PMI is charged on the $360,000 loan, not on the full price.
Do extra payments get rid of PMI sooner?
They can. Extra principal payments bring the balance to 80% of the original value earlier, and you can then ask your lender to remove PMI.
Who does PMI protect?
The lender, not you. It covers part of the lender’s loss if the loan is not repaid. It does not replace home insurance or pay your mortgage for you.