Last Updated: October 2025
Use this comprehensive Mortgage Calculator to accurately estimate your monthly principal, interest, and Private Mortgage Insurance (PMI) payments. Understanding these costs is crucial for budget planning before buying a home.
Mortgage Calculator with PMI
Detailed Calculation Steps
Mortgage Calculator with PMI Formula
The total monthly payment ($$M_{total}$$) is the sum of the Principal & Interest Payment ($$M_{PI}$$) and the Monthly PMI Payment ($$M_{PMI}$$).
1. Monthly Principal & Interest (P&I) Payment Formula:
$$ M_{PI} = P \frac{r_{month} (1 + r_{month})^{n_{month}}}{(1 + r_{month})^{n_{month}} - 1} $$
2. Monthly PMI Payment Formula:
$$ M_{PMI} = \frac{PMI_{annual}}{12} $$
3. Total Monthly Payment:
$$ M_{total} = M_{PI} + M_{PMI} $$
Formula Source: Investopedia – Mortgage Formula, CFPB – PMI Definition
Variables Explained
- $$P$$ (Loan Principal): The amount borrowed, calculated as Home Price minus Down Payment.
- $$r_{month}$$ (Monthly Interest Rate): The Annual Interest Rate (%) divided by 1200.
- $$n_{month}$$ (Total Payments): The Loan Term (Years) multiplied by 12.
- $$PMI_{annual}$$ (Annual PMI Cost): The total Private Mortgage Insurance premium paid annually, typically required if the Down Payment is less than 20% of the home’s value.
Related Calculators
- Affordability Calculator – Estimate how much house you can afford.
- Amortization Schedule Calculator – See how your principal and interest change over time.
- Refinance Savings Calculator – Determine if refinancing is financially beneficial.
- Debt-to-Income (DTI) Calculator – Calculate your DTI ratio for loan qualification.
What is Private Mortgage Insurance (PMI)?
Private Mortgage Insurance (PMI) is a type of insurance required by lenders when a home buyer takes out a conventional loan and makes a down payment of less than 20% of the home’s purchase price. PMI protects the lender, not the borrower, in case the borrower stops making payments. It essentially allows people to buy homes sooner with a smaller down payment, but at the cost of an added monthly fee.
The cost of PMI can vary significantly based on your credit score, the size of your down payment, and the loan-to-value (LTV) ratio. Typically, it ranges from 0.5% to 1.5% of the original loan amount annually. Once the borrower’s equity in the home reaches 20% (or is scheduled to reach 22%), federal law generally allows the PMI to be automatically cancelled, removing this monthly expense.
How to Calculate Total Monthly Payment (Example)
- Determine Loan Principal ($$P$$): Home Price $350,000 – Down Payment $35,000 = $315,000.
- Determine Monthly Rate ($$r_{month}$$) and Term ($$n_{month}$$): Annual Rate 6.5% / 1200 = 0.005417. Term 30 years * 12 = 360 months.
- Calculate Monthly P&I ($$M_{PI}$$): Plug $P$, $r_{month}$, and $n_{month}$ into the P&I formula, which yields approximately $1,991.68.
- Calculate Monthly PMI ($$M_{PMI}$$): Annual PMI $1,500 / 12 = $125.00.
- Calculate Total Monthly Payment ($$M_{total}$$): $1,991.68 + $125.00 = $2,116.68.
Frequently Asked Questions (FAQ)
- When does PMI automatically cancel? PMI must automatically be canceled by the servicer when your loan balance is scheduled to reach 78% of the original home value, provided you are current on payments.
- Can I request PMI cancellation sooner? Yes, you can typically request cancellation once your loan balance reaches 80% of the original home value, often requiring a new appraisal to confirm the value.
- Is PMI tax deductible? The deductibility of PMI has varied over the years. Consult a tax professional for the current status.
- What is the difference between PMI and MIP? PMI (Private Mortgage Insurance) is for conventional loans. MIP (Mortgage Insurance Premium) is for FHA loans. They serve the same purpose but have different rules.