Mortgage Calculator with PMI: The Real Cost of Less Than 20% Down

If you put 10% down on a $400,000 home, you owe an extra $233 per month in mortgage insurance. That is $2,796 per year for the right to buy with less than 20% down. Most buyers do not see this number until they are at the closing table.

PMI stands for Private Mortgage Insurance. It protects the lender, not you, if you default. You pay for it. Here is how to calculate it and how to get rid of it faster.

How PMI Is Calculated

PMI is expressed as an annual percentage of the original loan amount. The rate depends on your down payment size and credit score:

| Down Payment | Credit Score 760+ | Credit Score 700-759 | Credit Score 640-699 | |-------------|------------------|---------------------|---------------------| | 5% down | 0.41% | 0.54% | 0.95% | | 10% down | 0.19% | 0.31% | 0.52% | | 15% down | 0.17% | 0.23% | 0.39% |

On a $360,000 loan (10% down on $400,000 home) with a 760+ credit score:

• PMI rate: 0.19%
• Annual PMI: $684
• Monthly PMI: $57

On the same loan with a 700 credit score:

• PMI rate: 0.31%
• Annual PMI: $1,116
• Monthly PMI: $93

Your credit score determines your PMI rate as much as your down payment does.

Full Payment Breakdown

Here is what a $400,000 home looks like with 10% down at 6.75% over 30 years:

| Component | Monthly | |-----------|---------| | Principal & Interest | $2,334 | | Property Tax (1.1%) | $367 | | Homeowner's Insurance | $120 | | PMI (0.19% for 760 score) | $57 | | Total PITI + PMI | $2,878 |

Compare that to the 20% down version: $2,597 per month (no PMI, smaller loan). The 10% down buyer pays $281 more every month, on top of having put $40,000 less down.

Use the CalcMoney Mortgage Calculator to run your specific numbers with PMI included.

The 80-10-10 Alternative

Some buyers use a piggyback loan to avoid PMI entirely. The structure:

• First mortgage: 80% of home value
• Second mortgage (HELOC or home equity loan): 10% of home value
• Down payment: 10%

You end up with two loans instead of one but no PMI. Whether this saves money depends on the second loan's interest rate. If the HELOC rate is 9% and PMI is 0.19%, the HELOC costs more. Do the math before assuming piggyback is better.

When PMI Ends

PMI is not permanent. Three ways to remove it:

Option 1: Automatic cancellation. Federal law (Homeowners Protection Act) requires lenders to cancel PMI when your loan-to-value ratio hits 78% based on the original purchase price and original amortization schedule. You do not need to do anything.

Option 2: Request cancellation at 80% LTV. Once you reach 80% LTV through payments, you can request cancellation in writing. The lender may require a current appraisal showing the home value has not dropped.

Option 3: Appreciate your way out early. If home values rise and your loan balance drops, you can request an appraisal. If the new appraisal shows 80% LTV, you can cancel PMI before the schedule says you should.

How Long Until PMI Cancels Automatically?

On a $360,000 loan at 6.75%:

• 78% LTV target: loan balance of $312,000 (down from $360,000)
• Time to reach it through payments alone: approximately 9 years and 4 months

You will pay $57 to $93 per month for over nine years unless you take action sooner. That is $6,000 to $10,000 in total PMI costs.

Frequently Asked Questions

Is PMI tax deductible in 2026?

PMI deductibility has been on-again, off-again at the federal level. As of 2026, confirm the current status with a tax professional. Some states allow it even when the federal deduction is unavailable.

Can I avoid PMI with a conventional loan?

Yes, by putting 20% or more down. Some lenders also offer "lender-paid PMI" where they cover PMI in exchange for a slightly higher interest rate. This can make sense if you plan to sell or refinance within a few years.

Does FHA avoid PMI?

FHA loans do not have PMI but they have Mortgage Insurance Premium (MIP), which works similarly. FHA MIP often costs more than conventional PMI and lasts the life of the loan if your down payment is under 10%. Conventional with PMI is usually cheaper for buyers with credit scores above 680.