How the calculator works
Private mortgage insurance (PMI) protects the lender, not you, if you stop paying. It is usually required on a conventional loan when you put less than 20% down. The calculator takes your loan amount (price minus down payment), multiplies it by the yearly PMI rate you enter, and divides by 12. Your lender's Loan Estimate shows your real PMI quote; the 0.5% default is only a placeholder.
It then builds the loan's amortization schedule month by month to find when the balance reaches 80% and 78% of the home's original value, and when the loan hits the midpoint of its term.
The three ways PMI ends
The federal Homeowners Protection Act covers conventional loans for a single-family principal residence that closed on or after July 29, 1999.
| Trigger | When | What you must do |
|---|---|---|
| Borrower request | Balance reaches 80% of original value, on schedule or earlier through extra payments | Ask in writing; good payment history; current on the loan; no junior liens; may need to show value has not fallen |
| Automatic termination | Balance is scheduled to reach 78% of original value | Be current on payments |
| Final termination | First day of the month after the midpoint of the loan term (after payment 180 on a 30-year loan) | Be current on payments |
“Original value” generally means the lower of the contract sales price or the appraised value when the loan closed. A “good payment history” generally means no payment 30 or more days late in the last 12 months, and none 60 or more days late in the 12 months before that.
Worked example
You buy a $400,000 home with $20,000 down (5%), so you borrow $380,000 at 6.5% for 30 years. Principal and interest is about $2,402 a month. Your lender quotes PMI at 0.5% a year.
- Monthly PMI: $380,000 × 0.5% ÷ 12 = about $158.
- The balance is scheduled to reach 80% of $400,000 ($320,000) at payment 124, a little over 10 years in.
- It is scheduled to reach 78% ($312,000) at payment 135, so PMI ends automatically after about 11 years 3 months. Total PMI: about $21,400.
- If you ask at 80%, you pay about $19,600, saving roughly $1,700.
- Add $200 a month in extra principal and you reach 80% at payment 87, cutting total PMI to about $13,800 if you ask then.
Edge cases
- FHA loans charge a mortgage insurance premium (MIP) with its own rules; it does not follow this law. Use the FHA loan calculator.
- VA loans have no PMI or MIP. Most borrowers pay a one-time funding fee instead; see the VA loan calculator.
- Lender-paid mortgage insurance follows different rules; ask your lender how and whether it ends before you choose it.
- Rising home values are not counted by the law's timeline, which uses original value. Servicers and investors such as Fannie Mae and Freddie Mac may have their own removal guidelines, which can't be less favorable than the law. Ask your servicer.
- Adjustable-rate loans use the amortization schedule in effect at the time. This calculator assumes a fixed rate.
What to do next
See your full payment with the mortgage calculator, test prepayments with the extra payment calculator, and read the full guide to private mortgage insurance. Saving toward 20% down instead? Try the down payment savings calculator.