PMI Calculator

Private mortgage insurance is required on conventional loans when you put down less than 20%, and it protects the lender, not you. It's quoted as an annual percentage of the loan — typically 0.3% to 1.5%, driven by credit score and loan-to-value — and divided by twelve into your monthly payment. It builds no equity and returns nothing; it's purely the price of borrowing with a small down payment.

A $360,000 loan at a 0.5% PMI rate costs $150 a month, or $1,800 a year. At 6.5% over 30 years, scheduled payments bring the balance to 80% of the original price after 7 years 11 months — about $14,250 of PMI paid by then. The automatic cancellation point at 78% arrives at 9 years 1 month, so the difference between requesting removal and waiting out the automatic date is about $2,100.

Under the Homeowners Protection Act you can request PMI removal once the balance reaches 80% of the original value, and the servicer must cancel automatically at 78% if you're current on payments. The gap matters: requesting is the borrower's job and nobody reminds you, so many people pay months of unnecessary premiums. Mark the date and ask.

The schedule above assumes your home's value never changes, but cancellation can be based on current value rather than the original price. If the home appreciates, a new appraisal — typically a few hundred dollars — can get you to 80% years earlier. Most servicers require the loan to be at least two years old, and some want 75% LTV rather than 80% when relying on appreciation.

The instinct to avoid PMI by waiting for 20% can cost more than it saves in a rising market, where home prices and rents climb faster than you accumulate the extra down payment. Weigh a few years of PMI against that. Also compare alternatives: lender-paid PMI trades the premium for a permanently higher rate, and FHA loans carry mortgage insurance that in many cases never cancels at all.