PMI Calculator
Calculate your private mortgage insurance cost and when it will be eliminated
What Is PMI and How Much Does It Cost?
Private mortgage insurance (PMI) is required when your down payment is less than 20% of the home's purchase price. PMI protects the lender — not you — in case of default. Typical PMI costs range from 0.5% to 1.5% of the loan amount annually, paid monthly. On a $300,000 loan, that's $125–$375/month on top of your regular mortgage payment.
The exact rate depends on your credit score, loan-to-value ratio, loan term, and lender. Borrowers with higher credit scores generally pay less PMI.
How to Get Rid of PMI
Under the Homeowners Protection Act, PMI must be automatically cancelled when your loan balance reaches 78% of the original purchase price (based on scheduled amortization). You can request cancellation earlier when you reach 80% LTV — but you may need a new appraisal to prove the current value. Paying extra principal accelerates reaching both milestones.
Frequently Asked Questions
- Can I avoid PMI without 20% down?Yes — some options: a piggyback loan (80/10/10 structure), lender-paid PMI (LPMI) where the lender covers PMI in exchange for a slightly higher rate, or VA loans (for eligible veterans) which have no PMI. FHA loans have MIP (mortgage insurance premium) which works differently and is often harder to remove.
- Is PMI tax deductible?PMI deductibility has changed over the years and depends on current tax law and income limits. As of recent years, it has been periodically extended but not made permanent. Consult a tax professional for your specific situation.
- How does extra principal payment affect PMI removal?Extra payments directly reduce your principal balance, accelerating when you hit 80% LTV. Even $100–$200/month extra can remove PMI 2–4 years earlier on a typical loan, saving thousands in insurance premiums.
What Private Mortgage Insurance Costs
Private mortgage insurance protects your lender — not you — if you stop making payments, and it's typically required whenever your down payment is under 20% on a conventional loan. The annual premium usually runs between 0.5% and 1.5% of the loan amount, with the exact rate driven by your credit score and loan-to-value ratio. On a $320,000 loan at 0.8%, that's about $2,560 a year, or roughly $213 added to every monthly payment until you build enough equity to cancel it. This calculator estimates your premium and, more importantly, projects when it disappears.
When PMI Goes Away
Under the federal Homeowners Protection Act, your lender must automatically cancel PMI once your loan balance reaches 78% of the original purchase price, based on the original amortization schedule. You can also request cancellation earlier — at 80% loan-to-value — and a rising home value or extra principal payments can get you there faster. Because PMI buys you nothing as a borrower, reaching that threshold quickly is one of the highest-return moves available to a recent homebuyer.
How to Eliminate PMI Faster
Three levers shorten the PMI window. First, extra principal payments push your balance toward the 78–80% mark ahead of schedule. Second, a new appraisal showing your home has appreciated can establish 20% equity based on current value rather than the original price — many lenders allow this after a couple of years. Third, if rates have fallen, refinancing into a new loan with at least 20% equity removes PMI entirely. Run your numbers above to see how each month of extra payment moves up your cancellation date.
- Can I avoid PMI without 20% down?Sometimes. Options include a piggyback (80/10/10) loan structure, lender-paid PMI built into a slightly higher rate, or certain loan programs with different insurance rules. Each has trade-offs worth comparing against simply paying PMI and canceling it early.
- Is PMI the same as homeowner's insurance?No. Homeowner's insurance protects your property against damage and liability. PMI protects the lender against default and provides no coverage to you.
- Does a better credit score lower PMI?Yes. PMI rates are tiered by credit score and loan-to-value, so a higher score can meaningfully reduce your premium for the same loan.