What is the PMI?
Private mortgage insurance is required on conventional loans when your down payment is under 20%. It protects the lender, not you, and typically costs 0.3% to 1.5% of the loan annually.
PMI must be automatically cancelled at 78% loan-to-value based on the original schedule, and you can request removal at 80%. Home appreciation can get you there far sooner than payments alone.
Formula & worked example
Drops when Balance / Current value ≤ 80%
Worked example: a 400,000 home with 40,000 down means a 360,000 loan at 90% LTV. At 0.6%, PMI costs 180 a month. With 3% annual appreciation and normal amortisation, LTV reaches 80% in 34 months — about 2.8 years — by which point you have paid roughly 6,120 in PMI.
How to use this pmi calculator
- Enter the home price and your down payment.
- Enter the PMI rate from your loan estimate — it varies with credit score.
- Set a realistic appreciation rate; it accelerates PMI removal significantly.
- Note the months until 80% LTV — request cancellation then.
Smart tips
- Request PMI cancellation as soon as you reach 80% LTV. Lenders do not always do it automatically until 78%.
- A new appraisal showing appreciation can remove PMI years early — worth the few hundred dollars it costs.
- A higher credit score lowers the PMI rate substantially, sometimes by half.
- Lender-paid PMI trades the monthly charge for a higher rate that never goes away — usually worse long term.
- FHA mortgage insurance works differently and often lasts the life of the loan, unlike conventional PMI.
Frequently asked questions
What is PMI?
Private mortgage insurance, required on conventional loans with less than 20% down. It protects the lender if you default.
How do I get rid of PMI?
Request cancellation at 80% loan-to-value, or wait for automatic termination at 78%. An appraisal showing appreciation can accelerate this.
How much does PMI cost?
Typically 0.3% to 1.5% of the loan amount annually, depending on credit score and down payment size.
Is FHA mortgage insurance the same as PMI?
No. FHA insurance usually lasts the life of the loan unless you put 10% or more down, whereas conventional PMI can be cancelled.
Want the theory behind the numbers? Read our US mortgage guides on the Money Blog.