PMI Calculator

How to use this PMI calculator

Private mortgage insurance, often called PMI, is one of those costs that can feel invisible until you compare monthly housing estimates. It can show up on a conventional loan when the borrower makes a smaller down payment, and it usually increases the monthly payment until the balance reaches a lower loan-to-value ratio. This calculator gives you a quick estimate of the monthly premium, the annual premium, and the total PMI cost over a chosen term so you can compare scenarios before you buy a home.

Start by entering the purchase price of the home, the amount you plan to put down, the annual PMI rate quoted by your lender or estimated from a mortgage quote, and the loan term you want to model. The tool does the rest. If you are testing multiple loan offers, it is especially useful to compare a lower down payment against a higher down payment and see how much extra PMI you would pay each month. For a full payment estimate that includes principal and interest, pair this calculator with the mortgage calculator or the home affordability calculator.

What PMI is and why it matters

PMI is not the same as homeowners insurance and it is not the same as property tax. It is a separate premium that some lenders charge when the down payment is small enough to leave the loan balance above the lender’s target threshold. The Consumer Financial Protection Bureau explained this in CFPB 2024 guidance, noting that mortgage insurance can raise monthly costs and is often tied to loan-to-value ratio rules, while Fannie Mae and Freddie Mac guidance has also emphasized that pricing varies by borrower profile and loan features. Because PMI rates and eligibility rules differ by product and lender, this calculator uses the annual rate you enter rather than trying to guess a rate that may not match your actual quote. That is important because PMI can materially change the affordability of a home. A borrower who puts 5% down may have a lower upfront cash requirement but a noticeably higher monthly housing payment than a borrower who puts 20% down. If you are deciding between waiting longer to save a bigger down payment or buying sooner, PMI is one of the clearest numbers to compare. The calculator shows that tradeoff clearly by turning a lender quote into a monthly and long-term cost estimate.

The formula behind the calculation

The formula behind this calculator is straightforward. The loan amount is the home price minus the down payment, and the monthly PMI is the loan amount multiplied by the annual PMI rate, divided by 12.

Monthly PMI = Loan Amount × Annual PMI Rate ÷ 12

In practice, that means a larger loan amount or a higher rate produces a larger premium. If you borrow $320,000 and your lender quotes PMI at 0.55% annually, the monthly premium is about $146.67. Over a 30-year term, that would add roughly $52,800 to the total cost if the rate stayed constant and the loan balance remained unchanged for the full term, which is a simplified illustration rather than a real lender quote. In real life, PMI may be canceled or recalculated under specific loan terms, so use this page as a planning estimate rather than a binding offer.

Worked example

Imagine you are buying a home for $400,000 and putting down $80,000. That leaves a loan amount of $320,000. If the lender quotes an annual PMI rate of 0.55%, the monthly PMI is approximately $146.67. That is the same as an annual PMI cost of about $1,760. If you model a full 30-year term, the calculator estimates about $52,800 in total PMI cost, though in real life cancellation rules may reduce that amount before the end of the term.

Now imagine a home priced at $300,000 with a $15,000 down payment. The loan amount becomes $285,000. At a 1.25% annual PMI rate, the monthly premium is approximately $296.88 and the yearly amount is about $3,562.50. That example shows why a higher PMI rate can matter dramatically, especially on a smaller down payment or a more expensive home. If you are comparing different down payment levels, use the down payment savings calculator alongside this page so you can see whether it makes sense to delay the purchase and save more cash.

Common mistakes to avoid

The biggest mistake is assuming PMI is included in your mortgage payment under the same rules as principal and interest. PMI is separate, and a borrower who focuses only on the mortgage payment can underestimate the true monthly housing cost. Another common mistake is treating PMI as permanent. In many loan programs, PMI can be canceled or reduced once the loan balance falls enough or after the required waiting period. A third mistake is using a rate that is only a rough guess. Because PMI varies by lender, loan type, and borrower profile, a quoted rate from one lender may not match another. Always confirm the exact PMI premium with the lender before you make a final affordability decision.

Limitations of this calculator

This calculator is a planning tool. It uses the annual PMI rate you enter and multiplies it by the loan amount over the term you choose. It does not model lender-specific rules, credit-score pricing tiers, mortgage insurance premium cancellation schedules, escrow changes, or tax implications. In some loans, PMI can be paid as a monthly premium, as a lump sum upfront, or as a combination of both. If you are looking at an actual mortgage quote, use the lender’s figures to evaluate the final payment. For a broader view of housing affordability, compare this tool with the rent vs buy calculator and the mortgage calculator so you can see how PMI changes the monthly cost of owning versus renting.