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

    Frequently Asked Questions

    How can I avoid PMI?

    Put at least 20% down, use a piggyback loan (80-10-10), choose a lender-paid PMI option (slightly higher rate), or use a VA loan which has no PMI regardless of down payment.

    How long will I pay PMI?

    PMI is automatically cancelled when your loan balance reaches 78% of the original home value. You can request removal at 80% LTV. With appreciation and extra payments, this can happen sooner than scheduled.

    Is PMI the same as homeowner insurance?

    No. PMI protects the lender against borrower default. Homeowner insurance protects you against property damage, theft, and liability. Both are often included in your monthly escrow payment, which causes confusion.

    Ready to run the numbers?

    Open PMI Calculator