How to Calculate PMI: Monthly Cost Formula and Examples

To understand how to calculate PMI, start with an estimated annual mortgage insurance rate and the original loan amount. For the monthly-premium illustration used by Equity Replay, multiply the loan amount by that rate and divide by 12. A $360,000 loan at an assumed 0.5% annual PMI rate produces a $150 monthly estimate.

Use a lender's quoted premium for a real loan. Our formula explains an assumption; it does not price insurance for your credit profile or predict a lender's offer.

How to calculate PMI from a loan amount

For this estimate:

Monthly PMI = original loan amount × (annual PMI rate ÷ 100) ÷ 12

First subtract your down payment from the home price. For a $400,000 purchase with $40,000 down:

Original loan amount: $400,000 − $40,000 = $360,000
Assumed annual PMI rate: 0.5% = 0.005
Annual estimate: $360,000 × 0.005 = $1,800
Monthly estimate: $1,800 ÷ 12 = $150

The 0.5% figure is a hypothetical input, not a current market average. Enter 0.5, rather than 50 or 0.005, in the annual-rate field of our PMI calculator. The calculator converts the percentage for you.

You can also start with a quoted annual premium in dollars: divide it by 12 to find its monthly equivalent. Check whether the quote specifies monthly payments, an upfront premium, or both. The CFPB's PMI overview explains these payment arrangements and where they appear in loan documents.

Compare monthly PMI cost at different down payments

Hold the home price at $400,000 and the assumed annual PMI rate at 0.5%. The formula produces these results:

Down payment	Original loan amount	Starting loan-to-value ratio	Monthly PMI estimate
5% ($20,000)	$380,000	95%	$158.33
10% ($40,000)	$360,000	90%	$150.00
15% ($60,000)	$340,000	85%	$141.67
20% ($80,000)	$320,000	80%	$0.00

Our calculator shows no PMI at 20% down or more. For the first three rows, it applies the same rate to a smaller loan as the down payment increases. It does not estimate a different insurance rate for each row.

A lender can quote different rates for different down payments and credit profiles. The CFPB's mortgage insurance guide describes those pricing factors. Holding one rate fixed helps you understand the math, but it limits the comparison with actual offers.

Calculate loan-to-value before comparing estimates

In a purchase-price illustration, starting loan-to-value, or LTV, equals the loan amount divided by the home price:

$360,000 ÷ $400,000 × 100 = 90% LTV

A 10% down payment therefore leaves a 90% starting LTV in this scenario. Lenders also consider appraisals and loan-specific rules; our calculator uses the home price you enter. It does not read an appraisal or underwriting file.

For a conventional purchase with less than 20% down, your lender may require PMI. It protects the lender if you stop paying. It does not replace homeowners insurance. The CFPB explains PMI's purpose and the down-payment threshold.

A PMI calculator cannot give your cancellation date

Our tool estimates a starting premium. It does not reduce the balance month by month or calculate when your servicer must stop charging PMI.

For covered borrower-paid PMI on single-family principal residences that closed on or after July 29, 1999, the CFPB describes a right to request cancellation at the scheduled 80% point, or sooner if extra payments reduce the balance to 80% of the home's original value. You must request it in writing, meet payment-history requirements, and satisfy lien and property-value conditions. The CFPB also describes automatic termination at the scheduled 78% point if you are current on payments.

Original value can differ from today's market value. Ask your servicer for the applicable dates and requirements. FHA insurance and lender-paid mortgage insurance follow different rules. Read the CFPB cancellation guidance before applying these thresholds to a loan.

Put the PMI estimate beside the rest of the payment

The $150 example covers PMI alone. It excludes principal and interest, property tax, homeowners insurance, and HOA dues. Use the mortgage payment calculator to view those components together. Our mortgage payment guide explains the full breakdown.

FHA mortgage insurance includes upfront and monthly costs under a different program, as the CFPB explains. This conventional-loan PMI illustration does not calculate FHA premiums.

For an offer comparison, keep the lender's premium beside the interest rate, closing costs, and payment schedule. A difference in one monthly line does not establish the total cost of the loan.

Equity Replay is an educational historical portfolio simulator with separate financial calculators. It is not a broker, a record of trades, or a lending service. Its calculators illustrate assumptions; they do not provide investment advice, a mortgage approval, or an insurance quote. A historical portfolio return cannot tell you what PMI will cost.