Audited 25 May 2026·Last updated 27 Jul 2026·5 citations·Tier 1·0 uses

PMI Calculator

Calculate private mortgage insurance costs. Estimate monthly PMI, total premiums, and loan-to-value ratio for your mortgage.

PMI Calculator

Purchase price or current appraised value
$
Percentage paid upfront
%
Annual premium as a percentage of loan amount
%
Original amortization period
years
Monthly PMI Cost
$196.88
Premium added to each mortgage payment
Loan Amount
$315,000.00
Loan-to-Value Ratio
90.00%
Annual PMI Cost
$2,362.50
Total PMI over Term
$70,875.00

Background.

Private mortgage insurance is a risk-mitigation product required by lenders when a borrower finances more than 80 percent of a home's value. The policy protects the lender—not the borrower—against default losses on the portion of the loan that exceeds the 20 percent equity threshold. Because it is a recurring cost added to the monthly mortgage payment, PMI directly affects affordability and the total interest-adjusted cost of homeownership. On a median-priced U.S. home with 10 percent down, annual PMI premiums typically range from 0.5 percent to 1.5 percent of the original loan amount, translating to thousands of dollars per year and tens of thousands over the life of the loan.

The requirement for PMI stems from the historical default data tracked by government-sponsored enterprises. Fannie Mae and Freddie Mac, which purchase the majority of conventional conforming loans, mandate mortgage insurance on loans with loan-to-value ratios above 80 percent at origination. Borrower-paid single-premium policies, lender-paid policies buried in the interest rate, and split-premium plans all exist, but the monthly borrower-paid premium remains the most common structure. The Homeowners Protection Act of 1998 establishes the legal framework for automatic PMI cancellation once the principal balance reaches 78 percent of the original property value, provided the loan is current and certain seasoning requirements are met. Borrowers may also request cancellation at 80 percent LTV based on the original amortization schedule or an updated appraisal.

Who searches for PMI calculators? The primary audience is prospective homebuyers deciding how large a down payment to accumulate. A buyer comparing 10 percent versus 15 percent down can use the calculator to quantify the incremental PMI cost of the smaller down payment and weigh it against the opportunity cost of keeping cash invested elsewhere. For instance, if a borrower has $40,000 available, choosing between a 10 percent down payment on a $400,000 home and a 15 percent down payment changes the loan amount from $360,000 to $340,000 and eliminates PMI sooner. Real estate investors analyzing leverage strategies also use PMI estimates to model cash flow on low-down-payment rental properties. Loan officers use the tool to illustrate monthly payment components during pre-qualification conversations.

Regulatory and market context matters. PMI rates are not uniform; they vary by credit score, loan type, debt-to-income ratio, and the specific mortgage insurer. Genworth Mortgage Insurance, MGIC, Radian, and Essent are the largest private mortgage insurers in the U.S., and each files rates with state regulators. The FHA, a government alternative, charges both an upfront mortgage insurance premium and an annual premium that often exceeds private market rates on higher-credit borrowers. VA loans do not require monthly mortgage insurance, instead charging a one-time funding fee. Because PMI is tax-deductible for eligible borrowers under IRS rules—subject to income phase-outs—the after-tax cost may differ from the headline premium. Congress has extended and modified the deductibility provision several times, most recently through the Further Consolidated Appropriations Act. A transparent calculator that isolates the monthly and total PMI burden allows borrowers to compare programs, optimize their down payment timing, and budget for the full cost of leveraged homeownership.

What is pmi calculator?

Private mortgage insurance is a credit enhancement policy that reimburses the lender for losses incurred if a borrower defaults on a conventional mortgage with a loan-to-value ratio exceeding 80 percent. The borrower pays the premium, but the lender is the insured party. PMI does not protect the borrower from foreclosure or cover missed payments.

The premium is typically expressed as an annual rate applied to the original loan amount. Rates range from roughly 0.3 percent for high-credit borrowers with 15 percent down to over 1.5 percent for borrowers with smaller down payments and lower credit scores. The monthly premium is one-twelfth of the annual amount. PMI remains in effect until the loan balance reaches 78 percent of the original value through scheduled amortization, or 80 percent through borrower-initiated cancellation with proof of property value and payment history. For FHA loans originated after June 3, 2013, with less than 10 percent down, annual mortgage insurance premiums continue for the entire loan term and can only be eliminated by refinancing into a conventional product. VA loans replace mortgage insurance with a funding fee. In all cases, the insurance reduces the lender's risk and enables borrowers to purchase homes with less than 20 percent equity.

How to use this calculator.

  1. Enter the purchase price or current appraised value of the home.
  2. Input the down payment percentage you plan to make.
  3. Provide the annual PMI rate quoted by your lender or insurer.
  4. Select the original loan term in years.
  5. Review the outputs: loan amount, LTV ratio, monthly PMI premium, and total PMI cost over the full term.

The formula.

M = L × r ⁄ 1200, L = P × (1 − d⁄100)
M · monthly PMIL · loan amountP · home pricer · annual PMI rate %d · down payment %

The private mortgage insurance model is a linear percentage calculation applied to the original loan balance. The first step is determining the loan principal. Given a home price P and a down payment percentage d, the loan amount L is computed as L = P × (1 − d/100). This subtraction reflects the borrower's initial equity contribution. The loan-to-value ratio, a critical underwriting metric, is simply L divided by P, multiplied by 100 to express it as a percentage. An LTV above 80 triggers the PMI requirement on conventional conforming loans.

The annual premium is a direct percentage of the original loan amount. For an annual PMI rate r, the yearly cost is L × (r/100). Unlike interest, which accrues on a declining balance, the standard monthly borrower-paid PMI premium is typically calculated on the original amortizing balance or the original loan amount depending on the insurer's filing, but for estimation purposes it is treated as a flat percentage of L. Dividing the annual premium by twelve yields the monthly addition to the mortgage payment: M_PMI = (L × r/100) / 12.

The total cost over the loan term extends the monthly figure across the full amortization horizon. For a loan term of T years, the number of monthly payments is 12T, so the undiscounted total PMI cost is M_PMI × 12T = L × (r/100) × T. This figure represents the worst-case scenario in which the borrower makes no extra principal payments and does not cancel PMI early. In practice, cancellation at 78 percent or 80 percent LTV reduces the total, but the calculator provides the full-term baseline for comparative analysis. The linearity of the formula makes it robust across all loan sizes and avoids compounding complexities, though borrowers should note that actual insurer pricing uses rate cards with credit-score and LTV tiers rather than a single flat rate.

A worked example.

Example

A borrower purchases a home for $425,000 and makes a 12 percent down payment. The loan amount is $425,000 × (1 − 0.12) = $425,000 × 0.88 = $374,000. The loan-to-value ratio is $374,000 / $425,000 = 0.879, or 87.9 percent. Because the LTV exceeds 80 percent, the lender requires private mortgage insurance at an annual rate of 0.92 percent of the original loan amount. The annual premium equals $374,000 × 0.0092 = $3,440.80. Dividing by twelve months yields a monthly PMI payment of $3,440.80 / 12 = $286.73. Over the 30-year loan term, if the borrower never prepays principal or cancels PMI early, the total PMI cost is $286.73 × 360 = $103,222.80. In practice, the borrower could request cancellation once the balance reaches 80 percent of the original value—approximately $340,000—or wait for automatic termination at 78 percent, which on a standard amortization schedule occurs around month 90, dramatically reducing the actual outlay. The calculator's total figure serves as a budgeting ceiling.

loan Term Years30
annual Pmi Rate0.92
home Price425,000
down Payment Percent12

Frequently asked questions.

What is the difference between PMI and homeowners insurance?
Private mortgage insurance protects the lender against financial loss if the borrower defaults, while homeowners insurance protects the borrower and lender against physical damage to the property from perils such as fire, wind, or theft. PMI is required on conventional loans with less than 20 percent down; homeowners insurance is required on virtually all mortgaged properties regardless of down payment size. PMI premiums are based on the loan amount and credit profile, whereas homeowners insurance premiums are based on replacement cost, location, and risk factors. PMI can be canceled once sufficient equity is established; homeowners insurance remains in force as long as the property is owned and financed.
When can I cancel PMI?
Under the federal Homeowners Protection Act of 1998, lenders must automatically terminate PMI on a conventional loan when the principal balance is scheduled to reach 78 percent of the original property value, assuming the loan is current. Borrowers may request cancellation earlier, at 80 percent LTV, based on the original amortization schedule or a current appraisal demonstrating appreciation. The borrower must have a satisfactory payment history, typically defined as no payments 30 days or more late in the past year. For FHA loans originated after June 3, 2013, with less than 10 percent down, annual mortgage insurance premiums continue for the life of the loan and can only be eliminated by refinancing into a conventional product.
Is PMI tax-deductible?
Borrower-paid mortgage insurance premiums are treated as qualified residence interest for federal income tax purposes, subject to income limitations. The deduction phases out for taxpayers with adjusted gross incomes above $100,000 and is fully eliminated above $109,000. The deductibility provision has been extended multiple times by Congress, most recently under the Further Consolidated Appropriations Act. To claim the deduction, the insurance contract must have been issued after 2006, and the property must be a primary or secondary residence. Lender-paid mortgage insurance, which is embedded in the interest rate rather than billed separately, is not separately deductible as PMI but may be deductible as mortgage interest. Taxpayers should consult IRS Publication 936 for current-year eligibility.
How do lenders determine my PMI rate?
Mortgage insurers file rate cards with state insurance regulators that tier premiums by credit score, loan-to-value ratio, loan term, debt-to-income ratio, and property type. A borrower with a 740 credit score and 10 percent down might receive an annual rate of 0.50 percent, while a borrower with a 680 score and 5 percent down could pay 1.20 percent or more. The lender selects the insurer and passes the rate to the borrower as part of the Loan Estimate. Fixed-rate loans generally receive lower PMI rates than adjustable-rate loans because the payment certainty reduces default risk. Investment properties and cash-out refinances carry additional surcharges.
Can I avoid PMI without a 20 percent down payment?
Yes, through several mechanisms. A piggyback loan structure—such as an 80-10-10 arrangement—uses a first mortgage at 80 percent LTV and a second mortgage for the remaining 10 percent, eliminating the PMI requirement while putting only 10 percent down. Some credit unions and specialized lenders offer portfolio loans that self-insure and waive PMI in exchange for a higher interest rate. VA loans do not require PMI, instead charging a one-time funding fee. FHA loans require mortgage insurance regardless of down payment size, so they do not avoid the cost. Borrowers should compare the total cost of each alternative, including interest on a second lien or a rate premium, against the monthly PMI cost on a single conventional loan.
Does PMI decrease as I pay down my loan?
Under the standard monthly borrower-paid plan, the premium is typically calculated on the original loan amount and does not decline as the balance amortizes. The monthly payment remains constant until cancellation, at which point it drops to zero. Some insurers offer declining-renewal policies where the coverage amount decreases with the loan balance, but these are less common and may not reduce the premium dollar-for-dollar. Borrowers who want a payment that declines over time may prefer a lender-paid single-premium policy financed into the rate, though this increases the interest cost over the entire loan term. The key point is that monthly PMI is generally a flat amount until termination, not an amortizing charge.
What is the difference between BPMI and LPMI?
Borrower-paid mortgage insurance (BPMI) appears as a separate line item on the monthly mortgage statement and can be canceled once the borrower reaches sufficient equity. Lender-paid mortgage insurance (LPMI) is built into the interest rate; the lender pays the premium upfront or over time and recovers the cost through a rate typically 0.25 to 0.50 percentage points higher than the BPMI equivalent. LPMI cannot be canceled because it is part of the rate structure for the life of the loan. Borrowers who plan to hold the mortgage for a short period or who expect rapid appreciation may prefer BPMI for its cancellation option. Borrowers who prioritize a lower monthly payment today and do not expect to prepay may find LPMI attractive despite the higher long-term interest cost.
Are FHA mortgage insurance premiums the same as PMI?
No. FHA mortgage insurance premiums are government-backed charges administered by the Department of Housing and Urban Development, whereas PMI is provided by private insurers and applies to conventional loans. FHA borrowers pay an upfront mortgage insurance premium (UFMIP), currently 1.75 percent of the loan amount for most forward mortgages, plus an annual premium that ranges from 0.15 percent to 0.75 percent depending on loan term, LTV, and base loan amount. Unlike conventional PMI, FHA annual premiums on loans with less than 10 percent down continue for the entire loan term. Loans with 10 percent or more down cancel after 11 years. FHA insurance protects the lender against loss and enables the government to guarantee the loan to investors.
Does refinancing remove PMI?
Refinancing into a new conventional loan can remove PMI if the new loan-to-value ratio is 80 percent or lower at origination. This is common among homeowners whose properties have appreciated significantly or who have paid down substantial principal. The new lender will order an appraisal to confirm current value. If the LTV is still above 80 percent, the new loan will require PMI, though the rate may be lower if credit has improved. FHA borrowers must refinance into a conventional loan to eliminate FHA mortgage insurance premiums because FHA does not allow cancellation on most loans. Borrowers should weigh the closing costs of a refinance—typically 2 percent to 5 percent of the loan amount—against the remaining PMI savings.
How does PMI affect my debt-to-income ratio?
Lenders calculate the debt-to-income ratio using the total proposed housing payment, including principal, interest, taxes, insurance, and PMI. Because PMI increases the monthly obligation, it raises the back-end DTI and can push a marginal borrower over the program limit. Conventional loans sold to Fannie Mae and Freddie Mac generally require a total DTI of 36 percent or lower for manually underwritten loans, though automated underwriting systems may approve ratios up to 43 percent or higher with compensating factors. FHA loans allow DTIs up to 43 percent in most cases, with some exceptions to 50 percent. A borrower with a $300 monthly PMI payment sees their DTI increase by roughly 6 percentage points on a $5,000 gross monthly income, making PMI a material underwriting variable.

References& sources.

  1. [1]CFPB (2023). "What is private mortgage insurance?"
  2. [2]Federal Reserve Board (1998). "Homeowners Protection Act."
  3. [3]IRS (2024). "Publication 936: Home Mortgage Interest Deduction."
  4. [4]HUD (2024). "FHA Single Family Housing Policy Handbook 4000.1."
  5. [5]Fannie Mae (2024). "Selling Guide: Mortgage Insurance."
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