What Private Mortgage Insurance Is
Private mortgage insurance, or PMI, is coverage that protects the lender, not you. If you stop making payments, PMI reimburses the lender for part of its loss. Lenders require it on conventional loans when your down payment is under 20% of the purchase price, because those loans carry more risk of loss.
PMI is priced as a percentage of the loan amount, and the rate depends on your credit score and your loan-to-value ratio. Because that pricing varies by lender and borrower, there is no single standard rate to quote. This calculator takes your PMI rate as an input so you can enter the number from your actual loan offer.
The calculator also shows the loan amount behind the numbers: your price minus your down payment. From there it applies your PMI rate to find the annual premium and the monthly charge that shows up on your statement.
How to Estimate Your PMI Cost
The math is simple once you have the rate. The annual PMI premium is the loan amount times the PMI rate, and the monthly charge is that annual premium divided by 12. On a $400,000 home with a $40,000 down payment, the loan is $360,000. At a 0.78% PMI rate, that works out to about $2,808 per year, or $234 per month.
That monthly number matters for two reasons. It is part of your true housing cost, so it belongs in any affordability check. It can also be the difference between qualifying and not qualifying under lender debt-to-income limits. Add it to your mortgage payment, taxes, and insurance when you budget.
PMI is not forever. Because the premium is based on the loan amount, it shrinks as you pay down principal, and it disappears once you cross the equity thresholds described below.
| Down Payment | Loan Amount | Annual PMI | Monthly PMI |
|---|---|---|---|
| 5% ($20,000) | $380,000 | $2,964 | $247 |
| 10% ($40,000) | $360,000 | $2,808 | $234 |
| 15% ($60,000) | $340,000 | $2,652 | $221 |
| 20% ($80,000) | $320,000 | No PMI | No PMI |
How to Cancel PMI
Federal law gives you clear rights to end PMI on conventional loans. Under the Homeowners Protection Act, your lender must automatically terminate PMI once your loan balance reaches 78% of the original home value, which is the same as 22% equity, assuming your payments are current.
You can also request cancellation once you reach 20% equity based on the original value, and some lenders allow it sooner based on a new appraisal if your home has gained value. Expect to make the request in writing, and confirm the lender removes the charge rather than only stopping the new billing.
Reaching 20% equity comes faster when you make a larger down payment, pay extra principal, or buy in a market where home values rise. If you are close to the threshold, a new appraisal could be a worthwhile investment to drop the premium early.
Frequently Asked Questions
How is mortgage insurance calculator calculated?
The formula is: Loan amount = price - down payment. Annual PMI = loan amount x PMI rate. Monthly PMI = annual PMI / 12.. Enter your values above and click Calculate to see your personalized result instantly. This calculator estimates private mortgage insurance on a conventional loan. It finds your loan amount by subtracting your down payment from the price, then applies your PMI rate to that balance.…
What inputs do I need for the mortgage insurance calculator?
You need: Price, Down Payment, Pmi Rate. Default values are pre-filled — adjust them to match your personal finances for a customized result.
Is the mortgage insurance calculator free to use?
Yes — all TorchFI calculators are completely free. No registration, no email required. Calculations run entirely in your browser for maximum privacy. We never see or store your financial data.
How does the mortgage insurance calculator help with FIRE planning?
Estimate how much private mortgage insurance you pay when your down payment is under 20%. See the monthly and annual cost on your loan amount. This calculator helps you make data-driven decisions about your financial independence journey instead of relying on guesswork.