Private mortgage insurance (PMI) is required when your down payment is less than 20% of the home price. Use this calculator to find your monthly and annual PMI cost, and see exactly how many months until PMI is automatically removed when your loan balance reaches 80% of the home value.
PMI (private mortgage insurance) protects the lender — not you — if you default on the loan. Lenders require it when your down payment is below 20% because lower equity loans carry higher default risk. PMI does not provide any direct benefit to you as the borrower.
PMI typically costs 0.5–1.5% of your loan amount annually. On a $320,000 loan at 0.85%, that is $2,720 per year or about $227 per month. Rates vary based on your credit score, loan type, LTV ratio, and insurer.
Once your loan balance reaches 80% of the original home value through regular payments, you can request PMI cancellation in writing. Your lender must automatically cancel PMI when the balance reaches 78% based on your original amortization schedule. If your home has appreciated significantly, you may be able to request removal earlier based on a new appraisal.
No. FHA MIP (mortgage insurance premium) is different from conventional PMI. FHA loans require MIP for the life of the loan if your down payment is less than 10%, while conventional PMI is removed at 80% LTV. FHA MIP rates also differ from conventional PMI rates.
Yes, there are a few options: a piggyback loan (80/10/10 structure), lender-paid PMI (LPMI) where the lender pays PMI in exchange for a higher rate, VA loans which have no PMI, and some state and local programs for first-time buyers.
Yes. Extra principal payments reduce your loan balance faster, which means you reach the 80% LTV threshold sooner. If your home is also appreciating, you may reach 80% LTV even faster. Once you believe you have 20% equity based on a new appraisal, you can formally request PMI removal.
LTV (loan-to-value) = current loan balance ÷ home value × 100. For example, if you owe $240,000 on a $300,000 home, your LTV is 80%. PMI is required when LTV exceeds 80%. As you pay down principal and your home appreciates, your LTV decreases.
PMI deductibility has varied year to year depending on Congressional extensions. As of recent tax years the PMI deduction has been available for some borrowers, but eligibility phases out at higher income levels. Consult a tax professional for your specific situation, as this provision has historically lapsed and been reinstated.