Form MTG-PMI

PMI calculator

Last reviewed July 13, 2026

Loaded example$400,000 loan, $450,000 home value, 6.5% over 30 years — balance reaches 80% of original value in month 89 (year 7, month 5) on the standard schedule — or earlier with extra payments.

The PMI removal estimate is built into the main mortgage calculator. Enter your loan amount, rate, term, and home value in the Home value field, and the calculator shows you the estimated month your balance reaches 80% of that value through scheduled payments alone.

This page explains what private mortgage insurance actually is, what it costs, the federal rules that govern when it ends, and when paying PMI is actually the rational choice.

What PMI is and what it is not

Private mortgage insurance is a policy that protects your lender if you default — not you. If you put down less than 20% on a conventional loan, the lender bears more of the risk that a sale in foreclosure will not cover the outstanding balance. PMI transfers that risk to an insurer. You pay the premium; the insurer pays the lender if you default and the sale falls short.

PMI does nothing for you directly. It does not protect your credit, cover your payments if you lose your job, or insure your home. What it does do is make you eligible for a conventional loan with less than 20% down, which lets you buy a home sooner than saving to 20% would allow.

What PMI costs

PMI premiums typically run 0.5% to 1.5% of the loan amount annually, paid monthly as part of your escrow payment. On a $400,000 loan, that is $2,000 to $6,000 per year, or roughly $167 to $500 per month added to your payment.

The exact rate depends on your credit score, your loan-to-value ratio, the loan type, and the PMI provider. Borrowers with higher credit scores and lower LTVs pay at the low end of the range. Your Loan Estimate will itemize the monthly premium.

The three ways PMI ends on a conventional loan

The federal Homeowners Protection Act (12 U.S.C. § 4901) sets the rules for borrower-paid PMI on most conventional loans on single-family primary residences:

  1. Borrower request at 80% LTV. You can request cancellation when the loan balance falls to 80% of the original value (the lesser of purchase price or appraised value at origination) based on scheduled payments. The servicer must honor the request if you are current, have a good payment history, and can demonstrate no subordinate liens and that the property has not declined in value. You have to ask — it does not happen automatically at 80%.
  2. Automatic termination at 78% LTV. The servicer must automatically cancel PMI when the balance reaches 78% of original value through scheduled payments, provided you are current on the loan. This happens whether you ask or not.
  3. Final termination at midpoint. Even if the balance has not reached 78%, the servicer must cancel PMI at the midpoint of the original amortization period (month 180 on a 30-year loan) if you are current.

The thresholds run off original value, not current market value. If your home has appreciated and you have 20% equity based on current market value but not yet based on original value, you do not have an HPA right to cancel yet. Cancellation based on appreciation is governed by investor rules (Fannie Mae and Freddie Mac servicing guides), which impose their own seasoning requirements and usually require a new appraisal at your cost.

FHA mortgage insurance is different

FHA loans carry two separate insurance charges: an upfront mortgage insurance premium (UFMIP) of 1.75% of the loan amount, typically rolled into the loan at closing, and an annual mortgage insurance premium (MIP) currently at 0.55% for most 30-year loans, paid monthly.

On FHA loans with a down payment of less than 10%, annual MIP runs for the entire life of the loan. Reaching 20% equity does not cancel it. The typical exit is refinancing into a conventional loan once you have enough equity to do so without PMI. With 10% or more down, MIP terminates after 11 years.

The Homeowners Protection Act does not govern FHA MIP. They are different insurance products under different rules.

PMI removal based on appreciation

If your home has risen in value and you believe your LTV is below 80% based on current market value, you may be able to request early cancellation — but not under the Homeowners Protection Act. This route requires:

  • A new appraisal (at your cost, ordered by the servicer).
  • Loan seasoning, typically at least two years from origination for the most favorable investor rules, and often five years.
  • Current payment status and good payment history.
  • LTV at or below the servicer's threshold (often 75–80% depending on the investor and the number of years seasoned).

Contact your servicer to ask about the exact process for your loan.

Is paying PMI ever the right call?

Often, yes. The alternative to buying with less than 20% down is usually waiting more years to save the difference — years of rent paid, years of potential price increases, years of compound interest not accruing on principal. If your market is appreciating and PMI runs $250/month but waiting would cost two or three more years of $2,500 rent, the math may well favor buying now and eliminating PMI later through the equity you build.

Run the comparison using the rent-versus-buy calculator with your actual numbers before assuming that waiting to avoid PMI is the right call.

When to use this calculator

Finding your PMI removal date on the current schedule

Open the main calculator. Enter your current loan balance, rate, remaining term, and your home's original appraised value (not current market value) in the Home value field. Read the PMI removal estimate in the summary panel. That is when automatic termination is required under the Homeowners Protection Act based on your scheduled payments.

Accelerating PMI removal with extra payments

With your numbers in the main calculator, add an extra monthly payment and watch the PMI removal date move. Compare the total extra paid against the PMI premiums you would save to see whether accelerating makes financial sense.

Checking whether refinancing is a better PMI exit than waiting

If you have enough equity to refinance into a conventional loan without PMI, compare the refinance cost against the remaining PMI premiums on your current schedule using the refinance calculator. The breakeven month tells you how long the refinance has to perform before the cost is recovered.

Frequently asked questions

What is the difference between PMI and MIP?

PMI (private mortgage insurance) is used on conventional loans and is issued by private insurance companies. MIP (mortgage insurance premium) is used on FHA loans and is issued by the Federal Housing Administration. They serve the same function — protecting the lender — but they have different cost structures and, critically, different removal rules. MIP on a low-down-payment FHA loan runs for the life of the loan; PMI on a conventional loan is removable when you reach 80% LTV.

Can my lender refuse to cancel PMI when I reach 80% LTV?

If you meet the HPA's conditions — balance at or below 80% of original value based on scheduled payments, current on the loan, good payment history, no subordinate liens, no evidence of value decline — the servicer is required by federal law to honor your cancellation request. They cannot simply refuse. If you believe you are eligible and the servicer does not comply, you can file a complaint with the Consumer Financial Protection Bureau.

Does extra principal I've paid count toward PMI removal?

Yes. The 80% threshold under the HPA can be reached by any combination of scheduled payments and voluntary extra principal. If your balance has fallen to 80% of original value, you can request cancellation, regardless of how you got there.

What is lender-paid PMI?

With lender-paid PMI, the lender covers the insurance premium but charges you a permanently higher interest rate in exchange. There is no monthly PMI line on the statement, but you pay for it through the rate for as long as you hold the loan. Unlike borrower-paid PMI, lender-paid PMI cannot be cancelled when you reach 80% LTV — the only way out is refinancing. It can make sense if you plan to sell or refinance soon; it is usually more expensive over a long hold.

I have 20% equity now due to appreciation. Can I remove PMI?

Not under the Homeowners Protection Act, which runs off original value, not current market value. You can request early cancellation based on appreciation under your investor's servicing rules (Fannie Mae or Freddie Mac), but this requires a new appraisal, a seasoning period, and good payment history. Contact your servicer to find out the specific process and requirements for your loan.

Sources

This calculator is an educational planning tool. Results are estimates based on the inputs and assumptions described on the methodology page. Nothing here is a loan offer, a rate quote, a pre-qualification, or financial advice. Verify every figure against your lender's official Loan Estimate or Closing Disclosure before making any decision.