PMI Calculator: Estimate Your Monthly Costs

When you’re buying a home with less than 20% down, your lender will likely require private mortgage insurance (PMI). It’s an extra cost added to your monthly payment, and it can surprise buyers who don’t plan for it.

To help you plan your house-buying budget, we created this PMI Calculator. With a few quick entries, you can estimate how much PMI might add to your monthly payment and see when you could expect it to drop off.

What Is Private Mortgage Insurance (PMI)?

Private mortgage insurance protects your lender in case you stop making payments on your loan. It doesn’t protect you, but it does help you qualify for a mortgage with less than 20% down.

PMI is usually required on conventional loans when your loan-to-value (LTV) ratio is greater than 80%. According to Fannie Mae, the cost typically ranges from 0.58% to 1.86% of the original loan amount per year, depending on your credit score, down payment, and loan type.

When Does PMI End?

You don’t have to pay PMI forever. It typically drops off once you’ve built 20% equity in your home, or when your loan balance reaches 78% of your home’s original value. You can also request to have PMI removed sooner if your home value rises and you can document enough equity through a new appraisal.

How a PMI Calculator Can Help You

Our calculator helps you estimate how much PMI could impact your budget and when you might be able to remove it. You can use it to:

• Compare the total cost of putting 5%, 10%, or 15% down.
• See how a higher credit score or lower loan amount changes your PMI.
• Plan when you’ll reach the 20% equity mark to cancel PMI.
• See what your monthly payment might look like without PMI.

It’s important to note that our PMI calculator provides rough estimates only. Your actual PMI rates can vary by lender, loan type, deposit amount, credit score, and individual circumstances. To get a more customized estimate, consult with a qualified mortgage professional.

Factors That Affect Your PMI Rate

Let’s look at the key elements that can influence how much PMI you’ll pay:

• Down payment: The smaller your down payment, the higher your LTV ratio will be, which usually means you’ll pay a higher PMI rate.
• Credit score: If you have a higher credit score, you will likely qualify for lower PMI payments.
• Loan type: Choosing a fixed-rate loan can result in a slightly lower monthly PMI premium than an adjustable-rate mortgage (ARM).
• Loan term: A shorter loan term, like 15 years, may reduce your PMI rate compared with a 30-year mortgage.
• Occupancy: Primary residences often have lower PMI rates than second homes or investment properties.
• Lender: Your PMI rate can also vary slightly depending on the lender you use. Some work with insurers that offer better rates for certain credit profiles or loan types, so it’s worth comparing offers.
• Individual circumstances: Factors unique to your situation, like a recent job change, inconsistent income, or a higher debt-to-income ratio, can influence your loan terms and, in turn, your PMI rate.

Ways to Avoid or Eliminate PMI Sooner

If you’d rather skip PMI altogether or shorten the time you pay it, there are a few strategies to consider:

• Put 20% down: This may seem obvious, but the simplest way to avoid PMI is by starting with enough equity at closing, by putting down at least 20%.
• Use lender-paid mortgage insurance (LPMI): Some lenders offer to pay the PMI upfront in exchange for a slightly higher interest rate.
• Refinance once your equity grows: When your home’s value rises, refinancing into a new loan may eliminate PMI earlier.
• Track your home’s value: Use tools like HomeLight’s Home Value Estimator to see when your equity may reach 20%.
• Make extra principal payments: Putting even a small amount toward your loan’s principal each month can help you reach 20% equity sooner.
• Make two additional payments per year: Splitting one extra monthly payment into biweekly installments (making two full extra payments each year) can shave years off your loan and help remove PMI faster.

Other Monthly Costs to Consider

While PMI is a major factor, remember that your full monthly payment also includes:

• Principal and interest: The base cost of repaying your mortgage loan.
• Property taxes: Local taxes based on your home’s assessed value.
• Homeowner’s insurance: Protection for your home and belongings.
• HOA fees: If your neighborhood has a homeowners association.

When combined, these make up your true monthly housing cost. For simplicity — and so you can isolate your PMI payments — our PMI calculator does not include these additional expenses. Try our Mortgage Payment Calculator to see a monthly and yearly breakdown that includes these costs.

More Free Homebuyer Tools from HomeLight

• Home Affordability Calculator: Estimate how much home fits your income and debt profile.
• Down Payment Calculator: Find out how different down payment amounts change your total costs.
• Closing Costs Calculator: Estimate how much you’ll need at the closing table.
• Earnest Money Calculator: Plan for your good-faith deposit when making an offer.
• Buyer’s Agent Match Tool: Connect with trusted agents who can help you find a home you love and can afford.
• Recently Sold Homes Map: This map lets you see recently sold homes, giving you an idea of what buyers are paying in your selected market.

Buyer Tips

Here are a few helpful points you might keep in mind as you plan your home purchase:

• Understand the trade-off: Paying PMI can help you buy sooner, but waiting to save more may reduce long-term costs.
• Ask your lender about options: Different lenders and loan types handle PMI differently. FHA loans, for instance, have their own mortgage insurance rules.
• Revisit your PMI timeline: Set a reminder on your calendar. Once you reach 20% equity, contact your lender to remove PMI and lower your payment.

A PMI Calculator Helps You Make an Informed Choice

As you can see, PMI can impact your house-buying timeline, budget, and your long-term costs. However, it doesn’t have to hold you back. Our PMI Calculator gives you a quick, ballpark view of what to expect.

Use it to run different scenarios. You can compare down payment options, see how your credit score impacts your PMI rate, and then decide what works best for your goals. Then, take the next step: connect with a trusted lender. There’s no obligation just to review your options.

When you’re ready to buy, HomeLight can connect you with a top-rated local agent who has the experience and skills to help make your homeownership plan a reality. We analyze over 27 million transactions and thousands of reviews to determine which agent is best for you based on your needs.

Happy house hunting!