PMI Calculator: Estimate Your Private Mortgage Insurance Cost
Buying a home with less than 20% down? You'll likely need to pay private mortgage insurance—an extra monthly cost that protects your lender (not you) if you stop making payments. This PMI calculator helps you estimate exactly how much you'll pay each month, so there are no surprises when your first mortgage statement arrives.
Whether you're a first-time buyer stretching to afford your down payment or you're weighing the trade-off between buying now versus saving longer, understanding your PMI costs is essential for realistic budget planning. Enter your home price, down payment, and estimated PMI rate to see your monthly and annual costs instantly.
What is PMI?
Private mortgage insurance is a type of insurance that protects your mortgage lender—not you—if you default on your loan. When you put down less than 20% on a conventional mortgage, lenders view the loan as higher risk. PMI gives them a safety net.
Most buyers don't realize PMI doesn't protect your investment or help you in any way. It's purely a cost of borrowing with a smaller down payment. That said, PMI makes homeownership accessible to millions of buyers who haven't saved a full 20% down payment—which, on a $400,000 home, would be $80,000.
Think of PMI as the price of buying sooner rather than waiting years to save more. For many buyers, paying PMI for a few years makes more financial sense than renting while home prices continue rising.
How PMI is Calculated
Your PMI cost depends on several factors, but the basic formula is straightforward:
Annual PMI = Loan Amount × PMI Rate
Monthly PMI = Annual PMI ÷ 12
For example, if you borrow $285,000 and your PMI rate is 0.5%:
- Annual PMI: $285,000 × 0.005 = $1,425
- Monthly PMI: $1,425 ÷ 12 = $118.75
Factors That Affect Your PMI Rate
Your actual PMI rate isn't one-size-fits-all. Lenders consider:
Factor | Impact on PMI Rate |
|---|---|
Down payment size | Lower down payment = higher rate |
Credit score | Higher score = lower rate |
Loan type | Fixed-rate typically lower than adjustable |
Loan term | 30-year may differ from 15-year |
Property type | Single-family vs. multi-unit |
Someone with a 760 credit score putting 10% down will pay significantly less than someone with a 660 score putting 5% down—even on the same home price.
Typical PMI Rates by Down Payment and Credit Score
PMI rates typically range from 0.2% to 2% of your loan amount annually. Here's what you might expect:
Down Payment | Credit 760+ | Credit 700-759 | Credit 660-699 | Credit Below 660 |
|---|---|---|---|---|
15% | 0.17-0.28% | 0.28-0.44% | 0.44-0.65% | 0.65-0.95% |
10% | 0.22-0.42% | 0.42-0.65% | 0.65-0.95% | 0.95-1.45% |
5% | 0.44-0.65% | 0.65-1.05% | 1.05-1.45% | 1.45-1.85% |
3% | 0.55-0.85% | 0.85-1.25% | 1.25-1.65% | 1.65-2.05% |
Rates are estimates and vary by lender. Your actual rate may differ.
The good news? If you have strong credit, your PMI costs will be on the lower end. Even with a smaller down payment, a credit score above 740 can keep your PMI manageable.
How to Use This Calculator
Step 1: Enter Your Home Price Input the total purchase price of the property you're considering. This is the sale price, not the loan amount.
Step 2: Enter Your Down Payment Add the amount you plan to pay upfront. The calculator will automatically show your down payment percentage and resulting loan amount.
Step 3: Review Your LTV Ratio Your loan-to-value ratio appears automatically. If it's above 80%, you'll need PMI on a conventional loan.
Step 4: Enter Your Estimated PMI Rate Use the rate table above as a guide, or enter a rate your lender has quoted. If you're not sure, try 0.5% for good credit with 10%+ down, or 1% for lower credit or minimal down payment.
Step 5: See Your Results View your monthly and annual PMI costs instantly. Use these numbers when calculating your total monthly housing payment.
Practical Examples
Example 1: First-Time Buyer with 10% Down
Sarah is buying her first home for $350,000. She's saved $35,000 for a 10% down payment and has a credit score of 725.
- Loan amount: $315,000
- LTV ratio: 90%
- Estimated PMI rate: 0.55%
- Monthly PMI: $144.38
- Annual PMI: $1,732.50
Sarah's PMI adds about $145 to her monthly payment. Once her loan balance drops to $280,000 (80% of $350,000), she can request PMI removal.
Example 2: Minimal Down Payment Buyer
Marcus found a $250,000 home and wants to buy with just 3% down ($7,500). His credit score is 680.
- Loan amount: $242,500
- LTV ratio: 97%
- Estimated PMI rate: 1.35%
- Monthly PMI: $272.81
- Annual PMI: $3,273.75
At nearly $275/month, PMI significantly impacts Marcus's budget. However, if home prices rise 5% annually, waiting three years to save 20% could mean paying $40,000+ more for the same home—far exceeding his total PMI costs.
Example 3: The 15% Sweet Spot
Jennifer is debating between putting 10% or 15% down on a $400,000 home. Her credit score is 750.
Scenario | Down Payment | Loan Amount | PMI Rate | Monthly PMI |
|---|---|---|---|---|
10% down | $40,000 | $360,000 | 0.38% | $114.00 |
15% down | $60,000 | $340,000 | 0.23% | $65.17 |
By putting an extra $20,000 down, Jennifer saves about $49/month on PMI. That's $588/year—a 2.9% return on her extra down payment. Plus, she's closer to the 80% LTV threshold for PMI removal.
How to Avoid PMI
You have several options if you'd rather not pay PMI:
1. Put 20% Down
The most straightforward approach. With 20% equity from day one, you won't need PMI at all. On a $300,000 home, that's $60,000 down.
2. Choose a Piggyback Loan (80-10-10)
Take out a second mortgage for 10% of the home price, put 10% down, and finance the remaining 80% with your primary mortgage. No PMI required—though the second loan typically has a higher interest rate.
3. Look for Lender-Paid PMI (LPMI)
Some lenders offer to pay your PMI in exchange for a slightly higher interest rate. You'll pay more over the life of the loan, but your monthly payment may be lower. The catch: you can't cancel LPMI by building equity—it's built into your rate forever.
4. Explore VA or USDA Loans
If you're a veteran or buying in an eligible rural area, these government-backed loans don't require PMI regardless of down payment. VA loans have a funding fee instead, and USDA loans have a guarantee fee, but both are typically cheaper than PMI.
When Can You Remove PMI?
PMI isn't forever—that's the silver lining. Here's how to get rid of it:
Automatic Cancellation (78% LTV)
By law, your lender must automatically cancel PMI when your loan balance drops to 78% of your home's original purchase price. This happens through your regular mortgage payments over time.
Borrower-Requested Cancellation (80% LTV)
You don't have to wait for automatic cancellation. Once you reach 80% LTV based on the original value, you can request cancellation in writing. Your lender may require a current appraisal at your expense.
Early Cancellation Through Appreciation
If your home value has increased significantly, you may qualify for early PMI removal. Many lenders allow cancellation at 80% LTV based on current market value (not original price) if you've had the loan for at least two years. You'll need to pay for an appraisal to prove the new value.
Example Timeline
On a $300,000 home with 10% down ($270,000 loan), automatic PMI cancellation at 78% LTV happens when your balance reaches $234,000. With a 30-year loan at 7% interest, that takes roughly 11 years through regular payments alone. Home appreciation or extra principal payments can speed this up considerably.
PMI vs. MIP: What's the Difference?
If you're considering an FHA loan, you won't pay PMI—you'll pay MIP (mortgage insurance premium) instead. Here's how they compare:
Feature | PMI (Conventional) | MIP (FHA) |
|---|---|---|
Required when | Less than 20% down | All FHA loans |
Upfront cost | None (usually) | 1.75% of loan amount |
Monthly cost | 0.2-2% annually | 0.55-1.05% annually |
Cancellation | Yes, at 80% LTV | Only if 10%+ down payment |
Credit requirements | Higher (620+ typically) | Lower (580+ with 3.5% down) |
The key difference: conventional PMI can be canceled once you build enough equity, while FHA MIP often lasts the entire loan term. If you plan to stay in your home long-term and have decent credit, a conventional loan with PMI may cost less overall.
Is PMI Worth It?
Honestly? For most people, yes—but let me explain why.
The Math on Waiting vs. Buying with PMI
Let's say you're considering a $350,000 home. You have $17,500 saved (5% down).
Option A: Buy Now with PMI
- PMI cost: ~$175/month
- You'll pay PMI for approximately 8 years: $16,800 total
Option B: Wait 5 Years to Save 20% ($70,000)
- If home prices rise 4% annually, that $350,000 home costs $426,000 in five years
- You'd need $85,200 for 20% down—not $70,000
- You've also paid ~$90,000 in rent while saving
Even with $16,800 in PMI costs, buying sooner often wins financially—especially in markets with steady appreciation. Plus, you're building equity instead of paying a landlord.
When PMI Might Not Make Sense
- You're in a declining housing market
- You can save 20% within 1-2 years
- Your credit score is low, resulting in very high PMI rates
- You qualify for a VA or USDA loan instead
A Note on Accuracy
PMI rates vary significantly between lenders and change based on market conditions. The estimates in this calculator provide a reasonable starting point for budgeting, but your actual rate may be higher or lower. Always get quotes from multiple lenders to compare actual PMI costs for your specific situation.
This calculator estimates PMI costs only—your total monthly mortgage payment will also include principal, interest, property taxes, and homeowners insurance. Consider using a full mortgage calculator for complete payment estimates.
Got questions about your specific situation? A good mortgage broker can run these numbers with real quotes from their lender network.