PMI Utility (USA)
Estimate monthly PMI and cancellation milestones.
📖 What is private mortgage insurance (PMI)?
PMI is insurance that protects the lender if a borrower defaults on a conventional loan with less than 20% equity. It is usually required when the starting loan-to-value ratio (LTV) exceeds 80%.
The cost is billed monthly alongside the mortgage payment and is calculated as a small annual percentage of the current loan balance, typically between 0.20% and 1.50% depending on credit score, loan type, and LTV.
Who pays it
The borrower pays PMI monthly even though the policy protects the lender against default loss.
How rate is set
Credit score and LTV drive the rate most; loan type and debt ratios adjust it further.
When it ends
Automatically at 78% LTV, or sooner on request at 80% LTV with supporting appraisal.
📉 When does PMI actually drop off?
Two forces shrink LTV over time: scheduled principal payments (amortization) and home price appreciation. Once amortized LTV hits 78% of the original home value, federal rules typically require automatic PMI cancellation.
Borrowers can request removal earlier at 80% LTV, often by providing an appraisal. This request path is especially useful when appreciation has outpaced amortization, because equity grew faster than the scheduled balance would imply.
The calculator estimates these milestones using your rate, term, and appreciation assumption — treat the drop date as directional since lender policy varies.
💡 Strategies to reduce or avoid PMI
Start at 80% LTV or lower
A 20% down payment from day one avoids PMI entirely on conventional loans.
Accelerate principal payments
Extra principal reaches the 80% milestone sooner — useful if lump-sum gifts or bonuses arrive.
Request removal after appreciation
Strong appreciation can justify an appraisal-based removal request before amortized milestones.
Consider lender-paid PMI tradeoffs
LPMI replaces monthly PMI with a slightly higher rate — often cheaper short-term, worse long-term.
❓ Frequently asked questions
Is PMI tax-deductible?
It was deductible in some years for eligible filers, but deductibility has changed several times. Check the current IRS rules and your itemization status before assuming any tax benefit.
Does FHA MIP work the same way?
No. FHA loans use Mortgage Insurance Premium (MIP) which has different cancellation rules — often MIP stays for the full loan term on newer FHA loans.
Can I pay PMI upfront instead of monthly?
Some lenders offer single-premium PMI paid at closing. It removes the monthly cost but adds to cash-to-close; evaluate based on holding period and break-even.