PMI Calculator
Use our PMI Calculator to estimate monthly private mortgage insurance.
PMI Results
What is Private Mortgage Insurance (PMI)?
Private Mortgage Insurance (PMI) is a type of insurance that protects lenders when a borrower makes a down payment of less than 20% on a home loan. If the borrower stops making mortgage payments, PMI helps cover the lender's risk. PMI is commonly required on conventional mortgage loans with a high loan-to-value ratio (LTV).
Many homebuyers use a PMI calculator to estimate how much private mortgage insurance they may need to pay each month. This helps borrowers understand their total mortgage cost before purchasing a home.
How is PMI Calculated?
PMI is typically calculated as a percentage of the total loan amount. Most lenders charge between 0.3% and 1.5% of the loan amount per year. The exact rate depends on factors such as your credit score, down payment amount, loan term, and the size of the mortgage.
The annual PMI amount is then divided into monthly payments and added to your mortgage payment.
PMI Calculation Formula
Loan Amount = Home Price − Down Payment
Yearly PMI = Loan Amount × PMI Rate
Monthly PMI = Yearly PMI ÷ 12
How to Calculate PMI
If you want to calculate PMI manually, follow these simple steps:
- Determine the purchase price of the home.
- Calculate your down payment amount.
- Subtract the down payment from the home price to find the loan amount.
- Multiply the loan amount by the PMI rate.
- Divide the yearly PMI cost by 12 to find the monthly PMI payment.
Using a PMI calculator makes this process easier because it automatically estimates your monthly PMI based on the values you enter.
How Do You Calculate PMI on a Mortgage?
To calculate PMI on a mortgage, lenders first determine the loan-to-value ratio (LTV). The LTV ratio compares the loan amount to the value of the property. If the LTV ratio is higher than 80%, lenders typically require PMI.
For example, if a home costs $300,000 and the buyer makes a $30,000 down payment, the loan amount is $270,000. With a PMI rate of 0.5%, the yearly PMI would be $1,350, which equals $112.50 per month.
How Do You Calculate PMI on a Loan?
PMI on a loan is calculated using the same formula as mortgage PMI. The lender applies a PMI rate to the total loan amount. The higher the loan-to-value ratio, the higher the PMI cost may be. Borrowers with better credit scores often qualify for lower PMI rates.
A loan with a larger down payment will usually have a lower PMI cost because the lender takes on less risk.
PMI Calculation Table
The following table shows examples of PMI costs for different home prices and loan amounts.
| Home Price | Down Payment | Loan Amount | PMI Rate | Monthly PMI |
|---|---|---|---|---|
| $300,000 | $30,000 | $270,000 | 0.5% | $112.50 |
| $400,000 | $40,000 | $360,000 | 0.7% | $210 |
| $500,000 | $50,000 | $450,000 | 0.8% | $300 |
When is PMI Required?
PMI is usually required when the down payment on a home is less than 20% of the purchase price. In this situation, the loan-to-value ratio exceeds 80%, which increases the lender's risk.
Most conventional mortgages require PMI until the borrower reaches at least 20% equity in the property.
How to Remove PMI
The good news is that PMI does not last forever. There are several ways to remove PMI from your mortgage.
- Reach 20% equity in your home.
- Request PMI removal from your lender.
- Make additional mortgage payments to reduce the loan balance.
- Refinance the mortgage if your home's value increases.
Once the loan-to-value ratio falls below 78%, lenders are generally required to remove PMI automatically.
If you plan to make a lump-sum payment toward your mortgage, you can estimate potential savings using our Mortgage Recast Savings Calculator . This tool helps homeowners understand how recasting a mortgage can reduce monthly payments and total interest costs.
PMI Calculator FAQs
How much is PMI per month?
PMI usually costs between 0.3% and 1.5% of the total loan amount per year. For example, if your loan amount is $300,000 and the PMI rate is 0.5%, your monthly PMI payment would be about $125.
How do you calculate PMI on a mortgage?
PMI on a mortgage is calculated by multiplying the loan amount by the PMI rate. The yearly PMI cost is then divided by 12 to determine the monthly PMI payment.
Can PMI be avoided?
Yes, PMI can be avoided by making a down payment of at least 20% of the home price. Some borrowers also avoid PMI through lender-paid mortgage insurance or special loan programs.
When does PMI go away?
PMI can usually be removed once your mortgage balance reaches 80% of the home's original value. Lenders are required to automatically remove PMI when the balance reaches 78% of the home's value.
Is PMI tax deductible?
In some cases PMI may be tax deductible, depending on current tax laws and your income level. It is recommended to consult a tax professional to determine if PMI is deductible for you.