PMI Calculator

PMI (Private Mortgage Insurance) is required when you put less than 20% down on a conventional loan.

It protects the lender — not you — if you default on the loan. Think of it as the lender's cost of doing business on a higher-risk, lower-down-payment loan. Because you have less skin in the game, the lender faces more risk.

Why it exists: Without PMI, lenders would need to either reject low-down-payment loans or charge substantially higher interest rates. PMI allows lenders to approve these loans at competitive rates by transferring default risk to an insurance company.

Typical PMI costs:

• Annual rate: 0.20%–2.00% of the loan amount
• On a $360,000 loan at 0.80%: $288/month
• Duration: Until you reach 20% equity (or 78% LTV auto-cancellation)

The silver lining: Unlike FHA mortgage insurance, conventional PMI can be removed once you have enough equity. That makes it a temporary cost — not a permanent one — for most borrowers.

Three paths to PMI removal:

1. Request cancellation at 80% LTV (most common)

• When your balance reaches 80% of the original purchase price, you can request removal in writing
• Lender may require a new appraisal (cost: $400–700) and a clean payment history
• If approved, PMI ends — often saving $100–400/month immediately

2. Automatic cancellation at 78% LTV (federal law)

• The Homeowners Protection Act (HPA) requires automatic PMI cancellation at 78% LTV
• Based on original amortization schedule, not extra payments made
• No action required — lender must cancel and notify you

3. Early removal via new appraisal (appreciation route)

• If home has appreciated significantly, get a new appraisal showing 80%+ equity
• Typically requires 2+ years of on-time payments and loan in good standing
• Could save years of PMI payments if your market has appreciated fast

Important: These rules apply to conventional loans only. FHA MIP has completely different (and less favorable) removal rules.

PMI is charged as an annual percentage of your loan amount, billed monthly.

Cost by credit score (30-year fixed, 10% down, $400K home, $360K loan):

• 760+ credit score: ~0.30% = $90/month
• 720–759: ~0.45% = $135/month
• 680–719: ~0.70% = $210/month
• 640–679: ~1.10% = $330/month
• 620–639: ~1.50% = $450/month

Cost by down payment (680 credit score, $400K home):

• 15% down ($340K loan): ~0.50% = $142/month
• 10% down ($360K loan): ~0.70% = $210/month
• 5% down ($380K loan): ~0.90% = $285/month
• 3% down ($388K loan): ~1.10% = $355/month

Rule of thumb: Budget $50–$200/month per $100,000 borrowed at good credit, and more if your score is below 680.

Not always — it depends on how long PMI lasts vs. the opportunity cost of a larger down payment.

The break-even analysis:

• Say you need an extra $30,000 to hit 20% down
• PMI on your loan is $175/month
• Break-even: $30,000 ÷ $175 = 171 months (14.3 years)
• But your PMI drops after ~7 years via normal amortization — so you'd actually save $175/month for only 7 years
• That's $14,700 saved — not $30,000 worth of savings

When 20% down makes sense:

• PMI rate is high (600s credit score)
• Home prices are flat or falling (appreciation won't help you exit PMI early)
• You have significant liquid savings beyond the down payment
• You're staying in the home long-term (10+ years)

When to put less than 20% down:

• You have a high credit score (PMI rate will be low)
• Home prices are rising fast (you'll hit 20% equity sooner)
• You'd be depleting your emergency fund to reach 20%
• PMI is tax-deductible in your situation (check current tax law)
• The extra cash earns more invested than it saves in PMI

Use this calculator's comparison section to see exactly how long it takes to break even for your specific numbers.

PMI is for conventional loans; MIP is for FHA loans — and the differences are significant.

Who pays less over time?

• 680+ credit + 5%+ down: Conventional almost always cheaper (PMI drops off)
• Below 680 credit + 3.5% down: FHA may be comparable or cheaper short-term; conventional wins long-term once PMI removes
• Under 620 credit: FHA is your primary option — conventional PMI is very expensive or unavailable

Yes — several strategies can help you avoid PMI with less than 20% down:

1. Lender-Paid PMI (LPMI)

• The lender pays the PMI upfront in exchange for a slightly higher interest rate (usually +0.25–0.375%)
• Good if: you plan to sell or refinance within 5–7 years (before the rate premium costs more than the PMI would have)
• Bad if: you're staying long-term — the higher rate lasts the full loan term

2. Piggyback Loan (80-10-10)

• First mortgage: 80% of home price (no PMI threshold)
• Second mortgage/HELOC: 10% of home price
• Your down payment: 10%
• Eliminates PMI entirely but adds a second loan payment
• May cost less than PMI if HELOC rates are favorable

3. VA Loan (if eligible)

• Zero down payment, zero PMI, competitive rates
• Available to qualifying active-duty, veterans, and surviving spouses
• VA funding fee applies but is often lower than PMI long-term

4. USDA Loan (rural properties)

• Zero down payment for qualifying rural buyers with income limits
• Has a guarantee fee (similar to PMI but usually lower)

5. Physician/Professional Loans

• Some lenders offer no-PMI loans to doctors, dentists, lawyers, and other professionals
• Typically no PMI with 5–10% down for qualifying occupations