Certified Financial Analyst and Mortgage Specialist.
Use this comprehensive tool to quickly estimate your total monthly mortgage payment, including Principal & Interest (P&I), Property Taxes, Homeowner’s Insurance, and the critical factor: Private Mortgage Insurance (PMI).
Home Mortgage Calculator with PMI Insurance
PMI is typically required when Down Payment is less than 20%.
Your Estimated Total Monthly Payment is:
$0.00Detailed Calculation Breakdown
Click 'Calculate' to see the detailed breakdown of your monthly payment.
Home Mortgage Calculator Formula
The total monthly payment is the sum of four components (PITI): Principal & Interest (P&I), Property Tax, Home Insurance, and Private Mortgage Insurance (PMI).
1. Principal & Interest (P&I) Formula (Amortization):
$$M = P \frac{r(1+r)^n}{(1+r)^n - 1}$$
Where:
M = Monthly P&I Payment
P = Principal Loan Amount
r = Monthly Interest Rate (Annual Rate / 12)
n = Total Number of Payments (Loan Term in Years * 12)
2. Total Monthly Payment:
$$Total Monthly Payment = P\&I + \frac{Annual Tax}{12} + \frac{Annual Insurance}{12} + \frac{Annual PMI Rate \times P}{12}$$
Variables Explained
- Loan Amount: The total amount of money you are borrowing.
- Down Payment (%): Used to determine the Loan-to-Value (LTV) ratio. If LTV is over 80% (i.e., down payment is less than 20%), PMI is required.
- Annual Interest Rate (%): The annual rate charged on your loan.
- Loan Term (Years): The duration over which the loan is paid back (e.g., 15 or 30 years).
- Annual PMI Rate (%): Private Mortgage Insurance, calculated as an annual percentage of the loan amount, applied when LTV > 80%.
- Annual Property Tax ($): Your yearly property tax bill, divided into monthly escrow payments.
- Annual Home Insurance ($): Your yearly homeowner’s insurance premium, divided into monthly escrow payments.
Related Calculators
Explore other financial tools to help with your home-buying decision:
- Mortgage Refinance Savings Calculator
- Rent vs. Buy Analysis Tool
- Debt-to-Income Ratio Estimator
- Affordability Maximum Loan Calculator
What is Home Mortgage Insurance (PMI)?
Private Mortgage Insurance (PMI) is a type of insurance that protects the lender—not the borrower—if you stop making payments on your loan. It is required by lenders when a borrower takes out a conventional loan and makes a down payment of less than 20% of the home’s purchase price. This requirement is in place because a lower down payment signifies a higher risk of default for the lender.
PMI is typically added to your monthly payment as part of your escrow account, alongside taxes and homeowner’s insurance. The premium is usually an annual percentage of the total loan amount, ranging from 0.2% to 1.5%. Critically, PMI is not permanent. By law, lenders must automatically cancel PMI when your loan-to-value (LTV) ratio reaches 78% of the original home value, although you can request cancellation earlier at 80% LTV.
How to Calculate a Home Mortgage Payment (Example)
Let’s use an example with a $300,000 Loan, 5% Down Payment, 6.5% Interest, 30-year term, 0.5% PMI, $3,600 Tax, and $1,200 Insurance.
- Determine LTV and PMI Requirement: Since the Down Payment (5%) is less than 20%, PMI is required.
- Calculate Monthly P&I: $P = 300,000$, $r = 0.065 / 12 \approx 0.005417$, $n = 360$. Using the formula, $P\&I \approx \$1,896.20$.
- Calculate Monthly Tax: Annual Tax of $\$3,600 / 12 = \$300.00$.
- Calculate Monthly Insurance: Annual Insurance of $\$1,200 / 12 = \$100.00$.
- Calculate Monthly PMI: Annual PMI Rate of 0.5% of loan amount: $(0.005 \times 300,000) / 12 = \$125.00$.
- Calculate Total Monthly Payment: $\$1,896.20 + \$300.00 + \$100.00 + \$125.00 = \$2,421.20$.
Frequently Asked Questions (FAQ)
How long do I have to pay PMI?
PMI is typically required until your loan-to-value (LTV) ratio reaches 80% of the home’s original appraised value, at which point you can request cancellation. Lenders must automatically terminate it when the LTV reaches 78%.
Is the PMI calculated on the Purchase Price or the Loan Amount?
The PMI premium is calculated as an annual percentage of the outstanding principal loan amount.
What is the difference between P&I and PITI?
P&I refers only to Principal and Interest, the core loan payment. PITI stands for Principal, Interest, Taxes, and Insurance, representing the total monthly housing cost often paid to the mortgage servicer.
Can I avoid paying PMI?
Yes, the easiest way to avoid PMI is to provide a down payment of 20% or more. Alternatively, you can explore lender-paid mortgage insurance (LPMI) or certain government-backed loan options.