PMI Calculator Formula

Understand the math behind the pmi calculator. Each variable explained with a worked example.

Use the PMI Calculator

Formulas Used

Monthly PMI Payment

monthly_pmi_cost = monthly_pmi

Annual PMI Cost

annual_pmi_cost = annual_pmi

Loan-to-Value Ratio

ltv_ratio = ltv

Total Monthly (P&I + PMI)

total_monthly_with_pmi = monthly_pi + monthly_pmi

Monthly P&I (without PMI)

monthly_pi_only = monthly_pi

Variables

VariableDescriptionDefault
home_valueHome Value(USD)400000
down_paymentDown Payment(USD)40000
pmi_rateAnnual PMI Rate(%)0.55
interest_rateMortgage Interest Rate(%)7
loan_term_yearsLoan Term(years)30
loan_amountDerived value= home_value - down_paymentcalculated
ltvDerived value= loan_amount / home_value * 100calculated
annual_pmiDerived value= loan_amount * pmi_rate / 100calculated
monthly_pmiDerived value= annual_pmi / 12calculated
rDerived value= interest_rate / 100 / 12calculated
nDerived value= loan_term_years * 12calculated
monthly_piDerived value= r > 0 ? loan_amount * r * pow(1 + r, n) / (pow(1 + r, n) - 1) : loan_amount / ncalculated

How It Works

What Is Private Mortgage Insurance?

PMI is required by conventional lenders when the down payment is less than 20% of the home value. It protects the lender if you default on the loan.

How PMI Is Calculated

Monthly PMI = (Loan Amount x Annual PMI Rate) / 12

PMI Rate Factors

  • Loan-to-value ratio: Higher LTV means higher PMI rates
  • Credit score: Better credit lowers your PMI rate (0.3% to 1.5% annual range)
  • Loan type: Fixed-rate loans have lower PMI than adjustable-rate

    • Removing PMI

    You can request PMI removal when your LTV reaches 80%. It is automatically cancelled at 78% LTV based on the original amortization schedule.

    Worked Example

    A $400,000 home with $40,000 down (10%), PMI rate of 0.55%, 7% interest, 30-year term.

    home_value = 400000down_payment = 40000pmi_rate = 0.55interest_rate = 7loan_term_years = 30
    1. 01Loan amount: $400,000 - $40,000 = $360,000
    2. 02LTV: $360,000 / $400,000 = 90%
    3. 03Annual PMI: $360,000 x 0.55% = $1,980
    4. 04Monthly PMI: $1,980 / 12 = $165.00
    5. 05Monthly P&I: $2,395.09
    6. 06Total monthly with PMI: $2,395.09 + $165.00 = $2,560.09

    Ready to run the numbers?

    Open PMI Calculator