Private mortgage insurance — better known by its acronym PMI — is the extra monthly premium lenders charge home buyers who put less than 20% down. It protects the lender, not you, if you default, but it is a real line item on your mortgage statement that can add $100 to $500 or more to every payment for years. This PMI calculator estimates exactly what you will pay each month, how much you will hand over in total, and the month your PMI finally drops off once you reach 20% equity.
Unlike a general mortgage calculator that folds PMI into a single lump PITI number, this page isolates the insurance cost itself. That matters because PMI is the one part of your payment that is scheduled to disappear — and knowing when it ends changes how you should budget, prepay, or even choose your down payment.
How to Use
- Enter the Home Price — the amount you agree to pay the seller. This is the value your loan-to-value ratio is measured against.
- Set your Down Payment as a percentage. At 20% or more, conventional loans usually require no PMI at all; below 20%, expect a monthly premium.
- Type your Interest Rate (APR). The engine uses it to amortize your balance, which determines how quickly you build enough equity to cancel PMI.
- Choose the Loan Term — 30 years is the default, but a 15-year term builds equity faster and shortens the time you pay PMI.
- Set the PMI Rate. Lenders quote it as an annual percentage of the loan balance, typically 0.3%–1.9%. If you do not know your rate, start with 0.5%–0.8% as a realistic middle estimate for a good credit profile.
- Read the result card: your Monthly PMI, the Annual PMI cost, the month your PMI Drops Off, and the Total PMI Paid before cancellation.
The core math is deliberately simple. Your monthly premium is your loan amount multiplied by the annual PMI rate, divided by twelve. The cancellation date is the first month your amortizing loan balance falls to 80% of the original home price — the threshold at which US law lets you request removal.
How PMI Is Calculated
PMI is charged as a percentage of the original loan amount, not of the home price. The formula is:
Monthly PMI = Loan Amount × (Annual PMI Rate ÷ 100) ÷ 12
For example, on a $380,000 loan with a 0.5% annual PMI rate: $380,000 × 0.005 = $1,900 per year, or $158.33 per month. Notice that the premium stays flat in dollars even as your balance shrinks — it is not recalculated each year on a declining balance, which is exactly why reaching the cancellation threshold as early as possible matters.
Your down payment sets both whether PMI applies and how much it costs:
- 3%–5% down — PMI is required, and the rate is usually at the higher end of the range because your loan-to-value ratio is riskier.
- 10% down — PMI is still required, but the quoted rate is often a little lower.
- 15% down — PMI required, approaching the cancellation threshold faster.
- 20% down (80% LTV) — PMI is generally waived at closing, saving you the entire premium.
Some lenders instead offer lender-paid mortgage insurance (LPMI) or a single upfront premium, which trades the monthly bill for a slightly higher interest rate. This calculator models the conventional borrower-paid monthly PMI, the most common scenario.
When Does PMI Drop Off?
Under the US Homeowners Protection Act (HPA), you have two cancellation rights tied to your loan-to-value (LTV) ratio of the original home value:
- Borrower-requested cancellation at 80% LTV — once your balance reaches 80% of the home's original purchase price, you may ask your servicer to cancel PMI. You must be current on payments and, in some cases, show the home has not declined in value.
- Automatic termination at 78% LTV — the servicer must cancel PMI automatically when your balance hits 78% of the original value, with no request needed.
This calculator targets the 80% LTV moment, because that is the earliest date you can act. Two ways to get there:
- Let time and amortization work — regular principal paydown slowly reduces the balance.
- Make extra principal payments — prepaying accelerates the balance below 80% and removes PMI sooner.
It is important to note that these thresholds use the original home value. Market appreciation alone usually does not count toward borrower-requested cancellation, though you can request removal through a home-value appraisal under the Homeowners Protection Act in certain circumstances.
Examples
Example 1 — A first-time buyer with 5% down. A couple buys a $400,000 home, puts 5% ($20,000) down, locks 6.5% for 30 years, and is quoted a 0.5% PMI rate. The loan is $380,000, so monthly PMI is $158.33 ($1,900 per year). Amortizing at 6.5%, their balance reaches 80% of the original value ($320,000) in about month 124, roughly 10 years and 4 months. Over that period they pay roughly $19,475 in PMI — money that builds no equity.
Example 2 — A million-dollar jumbo-style down payment. On a $1,000,000 home with 10% down ($900,000 loan) at 7.0% on a 30-year term and a 0.6% PMI rate, monthly PMI is a steep $450 ($5,400 per year). The higher rate and starting LTV mean the premium is large, but the faster amortization of a high-balance loan reaches 80% LTV around month 101, about 8.4 years, for a total PMI outlay near $45,000.
Example 3 — The 20% threshold. Buying a $300,000 home and putting 20% down ($240,000 loan) means no PMI at closing — the monthly premium is $0, and there is no cancellation date to track. The calculator confirms this by showing PMI is not required, which is the clearest way to see the cash you save by saving up the extra down payment.
FAQ
How is monthly PMI calculated?
Multiply your loan amount by the annual PMI rate (as a decimal) and divide by 12. For a $380,000 loan at 0.5%, that is $380,000 × 0.005 ÷ 12 = $158.33 per month. The rate is set by the lender based on your credit score, down payment, and loan-to-value ratio, and usually ranges from 0.3% to 1.9% of the loan amount annually.
When does PMI automatically drop off?
Under the Homeowners Protection Act, your mortgage servicer must automatically terminate PMI when your loan balance is scheduled to reach 78% of the home's original purchase price. You can request cancellation one step earlier, when the balance hits 80%, as long as you are current on your payments.
Can I get rid of PMI early by refinancing or prepaying?
Yes. Making extra principal payments lowers your balance faster, so you reach the 80% LTV threshold earlier and stop paying PMI sooner. Refinancing into a loan with at least 20% equity is another route. Use the cancellation estimate above and compare it against the cost of any refinance closing fees.
How much does PMI cost on average?
Annual PMI typically runs 0.3% to 1.9% of the original loan amount. On a $380,000 loan that is roughly $1,140 to $7,220 per year, or about $95 to $602 per month. Borrowers with smaller down payments and lower credit scores usually land at the higher end.
Do you pay PMI forever if you never reach 20% equity?
For most conventional loans, no — HPA requires automatic termination at 78% LTV regardless of whether you asked for it, even on a long 30-year term. The only loans PMI may not cancel are certain "lender-paid" policies or government loans structured differently; borrower-paid conventional PMI always has a termination date.
Does PMI cover my mortgage payment if I lose my job?
No. PMI protects the lender against loss if you default — it does not make payments for you or pay off the loan. Mortgage payment protection or unemployment insurance is a separate product you would have to buy separately.
Disclaimer
This PMI calculator is provided for informational purposes only and does not constitute financial, lending, or insurance advice. PMI rates, cancellation rules, and lender policies vary by servicer, loan program, credit profile, and property type. The cancellation date assumes standard amortization of the original loan balance against the original home value and does not account for home-value changes, extra payments, or lender-specific requirements. Always confirm your actual PMI cost and cancellation rights directly with your mortgage servicer or a licensed loan officer.