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PMI calculator and formula

PMI is charged on the original loan until the balance falls to 80 percent of the original price. On a $400,000 home with $20,000 down at 6.5 percent over 30 years and a 0.60 percent PMI rate, that is $190 a month for 124 months, $23,560 in total.

Total PMI until 80 percent LTV

$23,560.00

$190.00 a month for 124 months, until the balance falls to 80 percent of the original price.

Loan
$380,000.00
Starting loan-to-value
95.0%
Scheduled principal and interest
$2,401.86
Monthly PMI
$190.00
Months of PMI
124
Total PMI
$23,560.00
$
$

PMI typically applies when this is under 20 percent of the price.

%
yr
%

Charged on the original loan amount until the balance falls to 80 percent of the original price.

The formula

monthly PMI=L×p12until Bt≤0.8×H\text{monthly PMI} = \frac{L \times p}{12} \quad \text{until } B_t \le 0.8 \times H

LL is the loan, pp the annual PMI rate as a decimal, HH the original purchase price, BtB_t the amortised balance. The 80 percent threshold is the borrower-request cancellation point under US rules; automatic cancellation sits a little later.

What PMI is charged on

Private mortgage insurance protects the lender, not you, when the down payment is under 20 percent of the price. The premium is typically a percent of the original loan, paid monthly, and it does not fall as the balance falls. On a $400,000 home with $20,000 down the loan is $380,000, loan-to-value is 95 percent, and a 0.60 percent annual PMI rate is 380000×0.006/12=190380000 \times 0.006 / 12 = 190 a month, $190, every month until cancellation.

That $190 is on top of the scheduled principal-and-interest payment of $2,401.86. It is not added to the 6.5 percent rate. A reader who 'adds 0.60 percent to 6.5' and recomputes the payment has described a different loan, one whose extra 0.60 percent lasts 30 years instead of 124 months.

The loan payment calculator is the principal-and-interest piece. This page is the insurance rider, and the two have different end dates.

When it stops

Under US rules a borrower can usually ask for cancellation once the amortised balance hits 80 percent of the original purchase price, and cancellation is automatic a little later, at 78 percent. This calculator uses 80 percent of original price, on the amortised schedule, which is the borrower-request point. It does not revalue the house. A rising market can get you to 80 percent of current value sooner; a falling market later. The formula does not know the market.

On the default, 80 percent of $400,000 is $320,000. The balance on a $380,000 30-year loan at 6.5 percent falls to that level in month 124. Total PMI is 124×190=23560124 \times 190 = 23560, $23,560. A 10 percent down payment on a $350,000 home, 0.50 percent PMI, 6 percent over 30 years, starts at 90 percent LTV and drops PMI after 89 months, $11,681.25 in total, at $131.25 a month on a $315,000 loan.

Extra principal, the mortgage payoff calculator, shortens the wait, because the balance hits 80 percent sooner. This page assumes the scheduled payment only, so the month count is the slowest usual path.

A 20 percent down payment is a 0 percent PMI rate

At 20 percent down, loan-to-value is 80 percent on day one, so the threshold is already met and months of PMI is 0. That is why 20 percent is the number people quote, and it is also why a 19 percent down payment and a 20 percent down payment are not almost the same product. One of them has a monthly rider for years; the other does not.

Whether bringing the extra 1 percent to closing is cheaper than paying PMI is a comparison of this page's total against the cost of that extra cash (forgone return, or extra months of saving). This calculator names the PMI side. It will not name the opportunity cost of the extra cash.

What the quote on the letter is

Some PMI is a percent of the declining balance, some is a monthly dollar figure, some is financed into the loan. The quote on the loan estimate is the one to type in. A 0.60 percent of original loan is the default here because it is the form that makes the month count matter: the premium stays flat until it vanishes, so 124 months is 124 times the same $190.

FHA mortgage insurance is a different product with an upfront premium and, for many loans, an annual premium that does not cancel at 80 percent. Do not run an FHA loan through this calculator and call it PMI. The identity on this page is conventional PMI cancelling at 80 percent of original value.

Worked examples

5 percent down on a \$400,000 home

Home $400,000, down payment $20,000, rate 6.5 percent, 30 years, PMI 0.60 percent of the original loan. Monthly PMI, months of PMI, total PMI?

  1. Loan: 400000−20000=380000400000 - 20000 = 380000, so $380,000. Starting LTV: 95 percent.
  2. Monthly PMI: 380000×0.006/12=190380000 \times 0.006 / 12 = 190, so $190.
  3. Scheduled principal and interest: $2,401.86.
  4. The balance reaches 80 percent of $400,000, which is $320,000, in month 124. Total PMI: 124×190=23560124 \times 190 = 23560.

Monthly PMI is $190 for 124 months, $23,560 in total, on a $380,000 loan whose scheduled payment is $2,401.86. Starting loan-to-value is 95 percent.

10 percent down on a \$350,000 home

Home $350,000, down $35,000, rate 6 percent, 30 years, PMI 0.50 percent. Totals?

  1. Loan: 350000−35000=315000350000 - 35000 = 315000, so $315,000. Starting LTV: 90 percent.
  2. Monthly PMI: 315000×0.005/12=131.25315000 \times 0.005 / 12 = 131.25.
  3. Scheduled payment: $1,888.58. Months of PMI: 89. Total: 89×131.25=11681.2589 \times 131.25 = 11681.25.

Monthly PMI is $131.25 for 89 months, $11,681.25 in total, on a $315,000 loan. Starting loan-to-value is 90 percent. The scheduled payment is $1,888.58.

20 percent down, no PMI

Home $400,000, down $80,000, same 6.5 percent 30-year loan, PMI rate 0.60 percent. How many months of PMI?

  1. Loan: 400000−80000=320000400000 - 80000 = 320000, so $320,000. Starting LTV: 80 percent.
  2. The balance is already at the 80 percent threshold, so months of PMI is 0 and total PMI is $0.
  3. Monthly PMI would have been 320000×0.006/12=160320000 \times 0.006 / 12 = 160, but it is never charged. Scheduled payment is the principal-and-interest on $320,000.

Months of PMI is 0 and total PMI is $0, because a $320,000 loan on a $400,000 home is already 80 percent LTV. The scheduled payment is still computed; the insurance rider is not.

The mistake that costs the most

Folding the PMI rate into the loan rate and amortising it for 30 years.

0.60 percent of $380,000 for 30 years is a different, larger bill than 0.60 percent for 124 months. PMI stops. Interest does not. Add them into one rate and you will overstate the cost of a 5 percent down payment, sometimes by enough to flip a 'bring 20 percent' decision that the month-count arithmetic would not have flipped.

Common questions

Does PMI fall as I pay the loan down?

Not under the original-loan-percent form this calculator uses. The monthly amount stays flat until cancellation, then drops to zero. A declining-balance PMI quote is a different product; type that quote as a dollar figure only if you are using a different model.

Can a rising home price cancel PMI sooner?

Sometimes, by a current-value appraisal, which is a request to the servicer, not an automatic identity. This page uses original purchase price, the schedule that does not need an appraisal.

Is FHA mortgage insurance the same as PMI?

No. FHA has an upfront premium and, on many loans, an annual premium that does not cancel at 80 percent LTV. Do not run an FHA loan through this calculator.

Keep reading

This page is educational material, not financial advice. The figures come from the formula shown and assume the inputs you enter hold for the whole term. Your own rate, fees, taxes and timing will differ, so treat the output as arithmetic to check a decision against, not as a recommendation.