PMI Calculator

Private mortgage insurance (PMI) is an insurance policy that protects the mortgage lender if the borrower defaults. Lenders typically require it when the borrower's down payment is less than 20% of the home's purchase price, because the loan-to-value ratio is higher and therefore riskier for the lender. PMI protects the lender, not the borrower. The premium is paid by the borrower, usually added to the monthly mortgage payment.

Under the Homeowners Protection Act (12 U.S.C. 4901), you have the right to request PMI cancellation in writing when the loan-to-value ratio (based on the original purchase price and original amortization schedule) reaches 80%. Your lender must also automatically terminate PMI when the scheduled balance reaches 78% of the original purchase price, provided you are current on payments. You may be able to request early cancellation if the home has appreciated significantly, but the lender may require a new appraisal.

Yes, there are a few strategies. One is a piggyback loan (sometimes called an 80-10-10), where you take a first mortgage for 80% of the value, a second mortgage (home equity loan or HELOC) for 10%, and make a 10% down payment. Another is lender-paid PMI, where the lender pays the premium in exchange for a higher interest rate on the loan. A third option is some specialty loan programs (VA loans, for example) that do not require PMI at all.

FHA loans require mortgage insurance premium (MIP), not conventional PMI. FHA MIP has two components: an upfront premium of 1.75% of the loan amount (usually rolled into the loan) and an annual premium ranging from 0.15% to 0.75% depending on the loan term, amount, and LTV. Unlike conventional PMI, FHA MIP on loans with less than 10% down cannot be cancelled for the life of the loan (as of recent HUD rules). Conventional PMI is typically cheaper and cancellable once you reach 80% LTV.

PMI rates vary from roughly 0.2% to 2.0% of the loan amount per year, depending on the loan-to-value ratio, your credit score, the loan type, and the insurer. The default 0.85% in this calculator is a common mid-range estimate for a borrower with good credit and around 10% down. Your actual rate will be quoted by your lender or PMI provider before closing. The CFPB recommends asking lenders to disclose the PMI rate alongside the loan estimate.

Automatic cancellation is required by the Homeowners Protection Act at 78% LTV based on the original scheduled amortization (not early payoff). However, you can request cancellation earlier at 80% LTV by submitting a written request to your servicer, provided you have a good payment history and no junior liens. Servicers must respond to cancellation requests within 30 days. Check with your loan servicer for their exact process.