How to use the pmi calculator
- Enter the home price and the down payment as a percent of the price.
- Enter the interest rate and loan term.
- Enter a PMI rate as a percent per year. The default is an example. Ask your lender for the real figure, which depends on your credit and down payment.
- Read the monthly PMI, the payment with PMI, the months until the balance reaches 80% and 78% of the price and the total PMI paid until then.
Formula
Loan = price - down payment
PMI per month = loan x PMI rate / 12
Payment = principal x r / (1 - (1 + r)^-n), with r the monthly rate and n the months
The 80% month is the first month the scheduled balance is at or below 0.80 x the price; the 78% month uses 0.78
PMI paid = PMI per month x the months up to and including that month
This holds the premium level on the original loan, which is how many policies are priced. Some insurers use other methods.
Worked example
On a $400,000 home with 10% down, the loan is $360,000. At 6.5% for 30 years the principal and interest is $2,275.44. With a 0.6% PMI rate, PMI is $360,000 x 0.006 / 12 = $180.00 a month.
The scheduled balance reaches 80% of the price ($320,000) in month 95 and 78% ($312,000) in month 109. PMI paid until then is $19,620.00. With 20% down, there is no PMI.
When PMI can end
The Consumer Financial Protection Bureau explains that you can ask your servicer to cancel PMI when the balance is scheduled to fall to 80% of the original value, and that it must end automatically at 78% if you are current on payments. It must also end the month after the midpoint of the loan's term. Original value is generally the lower of the price and the appraisal. Source: https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/. Cancelling early at 80% has extra conditions, such as a good payment history and no second liens.
Ways to avoid or shorten PMI
A larger down payment, extra principal payments and a home that gains value can all shorten the time you pay PMI. Compare the cost of waiting for 20% down with paying PMI in the down payment calculator. FHA loans use a different insurance structure, shown in the FHA loan calculator.
Fit PMI into the whole payment
PMI is only part of what you pay. Taxes, homeowners insurance and any HOA dues add to it, as shown in the mortgage calculator. To judge what you can afford, use the mortgage affordability calculator.
Assumptions and limits
- The PMI rate is an example. Real rates depend on credit score, down payment, loan type and insurer.
- The scheduled balance follows a fixed rate loan with no extra payments.
- The 80% and 78% tests use the original home price, as a stand in for the original value.
- Lender paid PMI, single premium PMI, mortgage insurance on FHA loans and the midpoint termination rule are not modeled. Confirm dates with your servicer.
Frequently asked questions
How much is PMI on a conventional loan?
It varies. This tool uses an example rate you can edit. Ask your lender for the actual rate on your loan, since it depends on your credit and down payment.
When can I stop paying PMI?
On most conventional loans you can ask to cancel when the balance is scheduled to reach 80% of the original value, and your servicer must end it at 78% if you are current. Some loans have different rules. Your servicer can confirm the date.
Do I need PMI with 20% down?
Most conventional lenders do not require PMI when the loan is 80% or less of the value, so a 20% down payment often avoids it, but lender rules and some loan types differ.
Does extra principal speed up PMI removal?
Yes for the request at 80%, since extra payments bring the balance down sooner. The automatic 78% date, however, is based on the original schedule.