How the PMI Calculator Works
Private mortgage insurance (PMI) is an extra monthly cost lenders require when your down payment is less than 20% of the home's value. It protects the lender — not you — if you default. Our calculator shows exactly how much PMI adds to your payment based on your home price, down payment, and PMI rate.
Enter your home price and down payment, and the tool instantly calculates your loan-to-value ratio, your monthly PMI cost, and the point at which your PMI can be canceled — so you know the true cost of buying with less than 20% down.
How Is PMI Calculated?
PMI is expressed as an annual percentage of your loan amount, typically between 0.3% and 1.5%. That annual figure is divided into 12 monthly payments. For example, a $315,000 loan with a 0.5% PMI rate costs $1,575 per year, or about $131 per month.
Your exact rate depends on your credit score, down payment size, and loan type. Borrowers with higher credit scores and larger down payments get lower PMI rates.
When Can You Cancel PMI?
Under the Homeowners Protection Act, you can request PMI cancellation once your loan balance reaches 80% of the home's original value. Your lender is required to automatically cancel it when the balance hits 78% — assuming you're current on payments.
If your home has appreciated significantly, you may be able to cancel PMI even sooner by requesting a new appraisal to prove you've crossed the 20% equity threshold.
How to Avoid PMI Entirely
- Put 20% down — the simplest and most common way.
- Lender-paid PMI — a higher rate in exchange for no separate PMI line.
- Piggyback loan (80/10/10) — a second loan covers part of the down payment.
- VA loans — eligible veterans and service members pay no PMI.
Is PMI Always Bad?
Not necessarily. Waiting years to save 20% could mean missing out on home appreciation that outpaces your PMI cost. For many buyers, paying PMI temporarily to enter the market sooner is a smart trade-off. Run your numbers with our Affordability Calculator and Mortgage Calculator to see the full picture.
Frequently Asked Questions
How is PMI calculated?
PMI is calculated as an annual percentage of your loan amount (typically 0.3%–1.5%), divided into 12 monthly payments. Your rate depends on your credit score and down payment.
When can I cancel PMI?
You can request cancellation at 80% loan-to-value, and lenders must automatically cancel it at 78% under the Homeowners Protection Act.
How do I avoid paying PMI?
The most common way is a 20% down payment. Other options include lender-paid PMI, a piggyback loan, or a VA loan if you qualify.
Does PMI go toward my mortgage?
No. PMI protects the lender, not you, and does not build equity or reduce your loan balance. It's purely an insurance cost.