PMI Calculator

What it does

Calculate Private Mortgage Insurance (PMI) cost on a conventional loan with under 20% down, and project when it auto-cancels. Tool uses a credit-score × LTV (Loan-to-Value) matrix: excellent credit (760+) gets PMI rates of 0.30-0.55% of loan annually; mid-credit (680-759) 0.55-0.95%; lower-credit (620-679) 0.95-1.50%. LTV matters too — 95% LTV (5% down) costs more than 90% LTV (10% down). Output: monthly PMI cost, total PMI paid until cancellation, and the payoff month when the loan reaches 78% LTV (federal Homeowners Protection Act auto-cancel threshold).

PMI is the biggest hidden cost of buying with under 20% down. On a $400,000 loan with 5% down, a 700-credit-score borrower pays about $200-300/month in PMI for ~7-9 years before automatic cancellation. That’s $20,000-30,000 in PMI over the life of the loan — money that benefits the lender, not the borrower. Compare to keeping the same money invested: borrowing $20,000 more at 7% mortgage rate to skip PMI saves the PMI cost but adds interest. The break-even depends on how long you stay in the home and prevailing rates.

Removal strategies: (1) Automatic cancellation at 78% LTV based on original amortization schedule — federally mandated, no action required. (2) Request removal at 80% LTV with an appraisal showing the home’s current value supports the calculation. Worth it if home values have risen — pay $400-600 for an appraisal, save $200-300/month for 1-2 years sooner than auto-cancel. (3) Refinance to a no-PMI conventional loanonce you’ve built 20% equity. (4) Lender-paid PMI (LPMI) rolled into a slightly higher rate — saves the visible monthly PMI but you can never cancel it; only worth it if you’ll refinance within 3-5 years anyway.

How to use it

1. Enter the home price and down payment amount (or %). Tool computes initial LTV.
2. Pick your credit band: 760+, 720-759, 680-719, 620-679, or below 620.
3. Enter the loan term (typically 30 years; 15-year loans have lower PMI but higher monthly P&I).
4. Read monthly PMI cost, projected cancellation month (78% LTV federal auto-cancel), total PMI paid until cancellation.
5. Compare scenarios: rerun with 10%, 15%, 20% down to see the PMI savings vs the bigger upfront payment.
6. If considering refinance: rerun once you've made 24+ payments to see if requesting early cancellation at 80% LTV saves enough to justify a $400-600 appraisal.

When to use this tool

• Pre-purchase planning when down payment is under 20% — knowing the PMI cost helps decide whether to delay buying and save more, or buy now and pay PMI.
• Comparing FHA vs conventional loan options — FHA has different mortgage insurance (MIP) that lasts longer and works differently.
• Considering refinance — if rates have dropped AND home value has risen, refinancing can eliminate PMI even before reaching 80% LTV.
• Budgeting for the first 5-10 years of homeownership when PMI affects monthly cash flow.

When not to use it

• VA loans (military) — no PMI required, but a one-time funding fee of 1.4-3.6% applies.
• USDA loans (rural) — no traditional PMI, but a 1% upfront guarantee fee + 0.35% annual fee for the life of the loan.
• FHA loans — uses MIP (mortgage insurance premium) which has different rules: upfront 1.75% + annual 0.85% that lasts for the life of the loan if down payment under 10%.
• Cash purchases — no loan, no PMI.

Common use cases

• Verifying a number or output before passing it on
• Quick calculation during a typical workday
• Pre-decision sanity-check on inputs and outputs
• Educational use — demonstrating the underlying concept