What Is PMI and Why Do You Pay It?
Private Mortgage Insurance (PMI) is insurance that protects your lender — not you — if you default on your loan. It is required on conventional loans when your down payment is less than 20% of the home price. PMI costs typically range from 0.5% to 1.5% of your loan amount annually, added to your monthly payment.
The lower your down payment and credit score, the higher your PMI rate. Someone with a 760 credit score and 10% down pays much less PMI than someone with a 640 score and 5% down.
How PMI Affects Your Monthly Payment
| Down Payment | PMI Rate | PMI on $315K Loan | Monthly Cost |
|---|---|---|---|
| 5% down | ~1.1% | $3,465/year | $289/mo |
| 10% down | ~0.8% | $2,520/year | $210/mo |
| 15% down | ~0.5% | $1,575/year | $131/mo |
| 20% down | None | $0 | $0/mo |
When Does PMI Drop Off?
PMI cancellation is governed by the Homeowners Protection Act. There are two key thresholds:
- At 20% equity (80% LTV): You can request PMI cancellation in writing. Your lender must honor the request if you have a good payment history and the home value has not declined
- At 22% equity (78% LTV): Your lender must automatically cancel PMI based on your original amortization schedule — even if you never ask
This calculator shows you exactly which month you hit both thresholds so you know when to request cancellation and when it cancels automatically.
How to Get Rid of PMI Faster
- Make extra principal payments: Every dollar extra paid reduces your balance and accelerates when you hit 20% equity
- Request a new appraisal: If home values in your area have risen, you may already have 20% equity even without making extra payments. A new appraisal can prove it
- Refinance: If you have enough equity and rates are favorable, refinancing into a new conventional loan eliminates PMI immediately
Can I deduct PMI on my taxes?
PMI deductibility has varied by year depending on Congress. Check with a tax professional for the current year's rules as this changes frequently.
Is PMI the same as FHA MIP?
No — they are similar in purpose but different in structure. PMI is on conventional loans and drops off at 20% equity. FHA MIP on loans with under 10% down stays for the life of the loan unless you refinance. FHA MIP also has an upfront component that PMI does not.
Is my data private when I use this calculator?
Completely. All calculations run in your browser. Your financial details never leave your device and no lenders will contact you.