Estimate your monthly private mortgage insurance, when it drops off, and what it costs over the life of the loan.
What is PMI and when is it required?
Private mortgage insurance protects the lender — not you — if you default on a conventional loan with a small down payment. Lenders require it whenever your loan-to-value ratio exceeds 80%, i.e., whenever you put down less than 20%. PMI typically costs between 0.3% and 0.85% of the loan amount per year, paid monthly on top of your principal and interest. On a $360,000 loan at 90% LTV, that is roughly $195 a month at typical rates. It is a pure cost of borrowing with a small down payment: unlike your loan payment, it builds no equity and earns you nothing.
The 80/78 rule: how PMI drops off
PMI is not forever. Under federal law, you can request cancellation once your balance falls to 80% of the home’s original value — you must ask, and you need to be current on payments. Even if you forget, your servicer must terminate PMI automatically when the balance is scheduled to reach 78% of the original value. On a typical 30-year loan with 10% down at 6.5%, that automatic drop-off arrives around month 109 — roughly nine years in. Extra principal payments accelerate both dates, which is one of the highest-return uses of extra payments: every month of PMI avoided is pure savings on top of the interest saved.
What PMI costs: rate tiers
PMI pricing is risk-based. Borrowers at 80–85% LTV might pay around 0.30% per year, while those above 95% LTV can pay 0.85% or more — and your credit score moves you within those bands. This calculator uses standard published tiers as estimates; your lender’s actual quote depends on your credit profile, occupancy, and property type. When comparing lenders, compare the PMI rate alongside the interest rate: a slightly higher rate with cheaper PMI can beat a lower rate with expensive PMI.
What is PMI and why do lenders require it?
Private mortgage insurance protects the lender against default on conventional loans with less than 20% down. It lets borrowers buy sooner with a small down payment, at the cost of a monthly premium until the loan-to-value ratio drops to 80% or below.
How much does PMI cost per month?
Typically 0.3% to 0.85% of the loan amount per year, divided into monthly payments. At 90% LTV, expect roughly 0.65% annually — about $195 a month on a $360,000 loan. Your credit score and exact LTV move the rate within that range.
When does PMI automatically drop off?
Your servicer must cancel PMI automatically when your balance is scheduled to reach 78% of the home’s original value, provided you are current on payments. You can also request cancellation earlier, at 80% of original value.
Can I avoid PMI without 20% down?
Yes, with tradeoffs. Piggyback loans (an 80-10-10 structure) keep the first mortgage at 80% LTV but add a second loan at a higher rate. Lender-paid mortgage insurance eliminates the monthly premium but usually means a higher interest rate. Run both options here before deciding.
Is PMI tax-deductible?
The federal deduction for mortgage insurance premiums has expired and been extended multiple times by Congress, so its current status depends on the tax year. Consult a tax advisor for the law in effect when you file.