Putting down less than 20% on a home? You'll likely pay Private Mortgage Insurance (PMI) until you build enough equity. This calculator shows your monthly PMI, your loan-to-value ratio, how many years until PMI automatically falls off, and the total you'll pay before it does.
Private Mortgage Insurance
Private Mortgage Insurance exists to protect the lender, not you. When you put down less than 20% on a conventional loan, the bank sees a riskier borrower and charges a monthly premium to cover itself in case of default. It's bundled right into your mortgage payment, typically running somewhere between 0.3% and 1.5% of the loan each year depending on your credit score and down payment. On a $360,000 loan at 0.7%, that's about $210 a month landing on top of your principal and interest — money that builds you no equity at all.
The good news is that PMI is temporary. As you pay down the loan and your home (hopefully) appreciates, your loan-to-value ratio falls. Once you reach 80% LTV — meaning you've built 20% equity — you can formally request that your lender cancel PMI. And by law, on most loans the servicer must drop it automatically once the balance reaches 78% of the original value, no request needed. This calculator amortizes your loan to estimate exactly when that crossover happens and tallies how much PMI you'll have paid in the meantime.
Knowing that timeline is powerful. If you're close to the 20% line, even a few extra principal payments can knock months or years off your PMI and save thousands. Some buyers also use a larger down payment, a piggyback second loan, or lender-paid PMI to sidestep it entirely. Note that FHA loans work differently — their mortgage insurance often lasts the life of the loan, so the rules here apply to conventional mortgages.
Reach 20% equity (80% LTV) and you can request cancellation. At 78% the lender must drop it automatically.
PMI purely protects the lender. Every dollar is pure cost to you — which is why escaping it early matters.
Paying down principal faster lowers your LTV sooner, cancelling PMI months or years ahead of schedule.
Private mortgage insurance protects the lender, not the borrower, and is required on most conventional loans where the down payment is under 20%. The premium is set as a percentage of the loan balance and depends on both the loan-to-value ratio and credit score, ranging roughly from 0.2% to 1.5% a year. What makes PMI unusual among housing costs is that it is temporary and removable: US federal law requires automatic termination at 78% LTV based on the original amortization schedule, and borrowers may request cancellation at 80%, which an appraisal showing appreciation can reach years earlier than scheduled payments alone would.
Monthly PMI = (Loan amount × annual PMI rate) ÷ 12LTV = (Loan balance ÷ Home value) × 100Request cancellation at LTV 80%; automatic termination at 78%where:
Assumptions: Applies to conventional loans. FHA mortgage insurance works differently and, for most loans originated since 2013 with under 10% down, lasts the life of the loan rather than dropping off at 78%.
A $400,000 purchase with 5% down leaves $380,000 borrowed at 95% LTV, attracting a 0.55% PMI rate.
Result$174.17 a month — roughly $22,990 before it can be cancelled
Appreciation shortens this dramatically. If the home reaches $475,000, the 80% threshold becomes $380,000 — met immediately — and a $500 appraisal can end a $174 monthly charge. Lenders do not track this for you; the request has to come from the borrower.