- PMI
- Private mortgage insurance, required on conventional loans when the loan-to-value ratio is above 80%, usually because the down payment is under 20%. It protects the lender if you default, not you. This calculator charges the annual PMI rate on the original loan amount and divides it into monthly payments until PMI drops off.
- Loan-to-value (LTV)
- The loan balance divided by the home’s original value, shown as a percentage. A $288,000 loan on a $320,000 home is 90% LTV. PMI applies above 80% LTV, and its cancellation points are measured against the original value, so LTV falls only as principal is repaid under this calculator’s assumptions.
- PMI cancellation at 80%
- Under the Homeowners Protection Act, you can ask your servicer to cancel PMI once the balance reaches 80% of the home’s original value, provided you have a good payment history and meet the servicer’s other conditions. Extra principal payments can get you there sooner than the scheduled date this calculator shows.
- Automatic PMI termination at 78%
- Under the Homeowners Protection Act, PMI ends automatically when the scheduled balance reaches 78% of the home’s original value, if your payments are current, or at the midpoint of the loan term at the latest. The drop-off date this calculator reports is based on the scheduled amortization, without extra payments or reappraisal.
- Annual PMI rate
- The yearly PMI premium as a percentage of the loan amount. It depends mainly on your credit score and loan-to-value ratio; this calculator’s guidance puts the typical range between 0.2% and 2%. At 0.5% on a $288,000 loan, PMI costs $1,440 a year, or $120 a month.
- Down payment
- Cash paid toward the purchase price at closing. On a conventional loan, a down payment of less than 20% of the price leaves the loan above 80% LTV and triggers PMI. Every added dollar lowers the loan, the monthly PMI charge and the time until PMI drops off.
- Original value
- For PMI purposes, the lower of the purchase price or the appraised value at the time the loan was made. The Homeowners Protection Act thresholds are measured against it. Some lenders will also consider a new appraisal showing the home has gained value, but that is a lender policy rather than a legal right.
- FHA mortgage insurance (MIP)
- The mortgage insurance premium on FHA loans, which works differently from PMI: it has an upfront and an annual premium, and the Homeowners Protection Act cancellation rules do not apply to it. In many cases it lasts for the life of the loan. This calculator models conventional PMI only.
- Principal & interest
- The part of the monthly payment that repays the loan itself, before PMI, taxes and insurance. It stays the same over a fixed-rate term. As each payment reduces principal, the balance moves toward the 80% and 78% thresholds, which is how this calculator finds the PMI drop-off date.
