PMI Parameters

Enter the home purchase price between $50,000 and $10,000,000
Enter the down payment amount
Enter down payment as percentage of home price
Enter annual interest rate
Enter loan term in years
Enter annual PMI rate (typically 0.3-1.9%)

Note: PMI is typically required when down payment is less than 20%. PMI can be removed when LTV reaches 80% or below.

PMI Results

PMI Required - LTV: 85%
Monthly PMI
$227
Annual PMI
$2,720
Current LTV
85.0%
PMI Removal Timeline
8 years 4 months
Total PMI Cost
$22,680

PMI Analysis

Current vs 20% Down Payment Comparison
Option
Down Payment
Monthly Payment
Current (with PMI)
$60,000
$2,299
20% Down (no PMI)
$80,000
$2,072
Difference
$20,000
$227
Key Insights
  • PMI required due to 15% down payment
  • Monthly PMI cost: $227
  • PMI will be removed in 8 years 4 months
  • Total PMI cost over loan term: $22,680
Recommendations

⚠ Consider larger down payment

Increasing down payment to 20% would eliminate PMI and save $22,680 over the loan term.

Understanding Private Mortgage Insurance (PMI)

What is Private Mortgage Insurance?

Private Mortgage Insurance (PMI) is a type of insurance that protects lenders against losses if a borrower defaults on their mortgage. PMI is typically required when you make a down payment of less than 20% of the home's purchase price, as this represents a higher risk to the lender.

How PMI Works

PMI Calculation:

  • PMI is calculated as a percentage of your loan amount
  • Typical PMI rates range from 0.3% to 1.9% annually
  • Higher loan-to-value ratios result in higher PMI rates
  • PMI is paid monthly as part of your mortgage payment

PMI Removal Options:

  • Automatic removal when LTV reaches 78% (based on original home value)
  • Request removal when LTV reaches 80% (may require appraisal)
  • Refinancing when home value increases significantly
  • Making extra principal payments to reach 80% LTV faster

PMI vs Other Mortgage Insurance Types

PMI (Conventional Loans)

  • Can be removed when LTV reaches 80%
  • Rates vary based on credit score and LTV
  • Monthly or upfront payment options
  • Not tax-deductible for most borrowers

MIP (FHA Loans)

  • Required for life of loan in many cases
  • Fixed rates set by FHA
  • Both upfront and annual premiums
  • Cannot be removed without refinancing

VA Funding Fee

  • One-time fee for VA loans
  • No ongoing monthly payments
  • Can be financed into loan amount
  • Waived for disabled veterans

Strategies to Minimize PMI Costs

Before Buying

  • Save for a larger down payment (20% or more)
  • Improve credit score for better PMI rates
  • Consider piggyback loans (80-10-10 structure)
  • Shop around for lenders with competitive PMI rates
  • Consider lender-paid mortgage insurance (LPMI)

After Buying

  • Make extra principal payments to reach 80% LTV
  • Monitor home values for appreciation
  • Request PMI removal when eligible
  • Consider refinancing if rates drop or home appreciates
  • Track your loan balance and home value regularly

PMI Tax Considerations

PMI tax deductibility has changed over the years and depends on current tax law. As of recent tax legislation, PMI premiums may be deductible for taxpayers with adjusted gross income below certain thresholds. However, this deduction has expired and been renewed multiple times.

Important: Always consult with a qualified tax professional regarding the deductibility of PMI premiums for your specific tax situation, as tax laws change frequently and have income limitations.

⚠️ Important Disclaimer

This PMI calculator provides estimates for planning purposes only. Actual PMI rates, removal timelines, and costs may vary based on your credit profile, loan-to-value ratio, loan type, and lender requirements. PMI rates are subject to lender policies and can change. Always consult with qualified mortgage professionals and compare offers from multiple lenders before making borrowing decisions. This calculator does not constitute financial advice.