Private Mortgage Insurance Calculator

When buying a home, you may be required to pay for private mortgage insurance (PMI) if you make a down payment of less than 20%. PMI protects the lender in case you default on your mortgage. The cost of PMI varies depending on factors such as your credit score, loan amount, and the size of your down payment. To help you calculate the cost of PMI, we have created a private mortgage insurance calculator. In this article, we will explain how PMI works, how to use our calculator, and answer some common questions about PMI.

What is Private Mortgage Insurance?

Private mortgage insurance, or PMI, is an insurance policy that protects the lender if you cannot make your mortgage payments. If you make a down payment of less than 20%, the lender may require you to pay for PMI. The cost of PMI is usually added to your monthly mortgage payment. PMI does not protect you, the borrower, in case of default. It only protects the lender.

PMI is required by law to be canceled once you have paid off a certain amount of your mortgage. This is known as the loan-to-value (LTV) ratio. The LTV ratio is the amount of your loan divided by the appraised value of your home. Once your LTV ratio falls below 80%, you may be able to cancel your PMI. However, some lenders may require a higher LTV ratio, so be sure to check with your lender about their requirements.

How to Use the Private Mortgage Insurance Calculator

Our private mortgage insurance calculator is a simple tool that can help you estimate the cost of PMI for your mortgage. To use the calculator, you will need the following information:

1. The amount of your mortgage
2. Your down payment amount
3. Your credit score
4. The type of mortgage you have (fixed-rate or adjustable-rate)

Once you have this information, you can enter it into our calculator and it will give you an estimate of how much PMI you will have to pay each month. Our calculator takes into account factors such as your credit score and down payment amount, so it will give you a more accurate estimate than a simple percentage calculation.

Step 1: Enter Your Mortgage Amount

The first step in using our calculator is to enter the amount of your mortgage. This is the total amount of money you are borrowing from the lender. Enter this amount into the “Mortgage Amount” field.

Step 2: Enter Your Down Payment Amount

The next step is to enter the amount of your down payment. This is the amount of money you are paying upfront towards the purchase of your home. If you are making a down payment of less than 20%, you will likely have to pay for PMI. Enter your down payment amount into the “Down Payment” field.

Step 3: Enter Your Credit Score

Your credit score is a number between 300 and 850 that represents your creditworthiness. A higher credit score indicates that you are less risky to lenders and may result in a lower PMI rate. Enter your credit score into the “Credit Score” field.

Step 4: Choose Your Mortgage Type

You will need to choose the type of mortgage you have. There are two main types of mortgages: fixed-rate and adjustable-rate. A fixed-rate mortgage has a fixed interest rate that does not change over the life of the loan. An adjustable-rate mortgage has an interest rate that can change over time. Choose the type of mortgage you have from the dropdown menu.

Step 5: Calculate Your PMI Cost

Once you have entered all of the required information, click on the “Calculate” button. Our calculator will then give you an estimate of how much you will have to pay for PMI each month.

FAQ

What is the average cost of PMI?

The cost of PMI varies depending on factors such as your credit score, loan amount, and the size of your down payment. On average, PMI can cost anywhere from 0.3% to 1.5% of your original loan amount per year. This means that if you have a $200,000 mortgage, you could pay anywhere from $600 to $3,000 per year for PMI.

Can I cancel my PMI?

Yes, in most cases, you can cancel your PMI. Federal law requires that PMI be canceled once your LTV ratio falls below 78%. However, some lenders may require a higher LTV ratio, so be sure to check with your lender about their requirements. You may also be able to request that your PMI be canceled once your LTV ratio reaches 80%.

Is PMI tax-deductible?

PMI was tax-deductible in the past, but this deduction expired at the end of 2020. However, if you took out your mortgage before January 1, 2021, you may still be able to deduct your PMI on your taxes. Be sure to check with a tax professional to see if you are eligible for this deduction.

Do all lenders require PMI?

No, not all lenders require PMI. Some lenders may offer programs that allow you to make a smaller down payment without having to pay for PMI. However, these programs may come with their own requirements and restrictions, such as higher interest rates or income limits.

How long do I have to pay for PMI?

You will have to pay for PMI until your LTV ratio falls below the required amount, usually 78% or 80%. This can take several years, depending on the size of your down payment and how quickly you pay off your mortgage.

Note that these rates are only estimates and may vary depending on the lender and other factors.

Conclusion

A private mortgage insurance calculator can be a helpful tool when buying a home. It can help you estimate the cost of PMI and make informed decisions about your mortgage. Remember to check with your lender about their PMI requirements and options. With the right information and tools, you can make the home-buying process easier and more affordable.