How to use it
- Enter the loan amount in dollars.
- Enter your down payment in dollars.
- Enter the insurance premium rate as a decimal (e.g., 0.005).
- Read the PMI amount and LTV ratio that appear.
What it does – The PMI Calculator takes your loan amount, down payment and the insurance premium rate to compute two key numbers: the monthly PMI cost and the loan‑to‑value (LTV) ratio. Why it matters – PMI adds to your monthly payment until you reach the required equity, and LTV tells lenders how risky the loan is. How to read the results – The PMI amount is shown in dollars; a higher number means more insurance expense. The LTV is a percentage; the lower the percentage, the closer you are to owning the home outright. Use the figures to decide if a larger down payment or a different rate would save you money. You can also compare scenarios by adjusting the down payment or rate, instantly seeing how each change impacts both PMI cost and LTV, helping you negotiate better loan terms.
Pro tips
- Round down the down payment to the nearest $100 to avoid tiny LTV shifts.
- Use the insurance rate as a decimal (0.005 for 0.5%) to get correct PMI.
- Enter the full loan amount before subtracting the down payment; the calculator does the rest.
- Double‑check that the down payment isn’t larger than the loan amount to prevent negative LTV.
Real-life examples
- First‑time homebuyer evaluating if a 5% down payment keeps PMI affordable.
- Real estate investor comparing PMI costs on two properties with different loan sizes.
- Mortgage broker showing clients how a higher down payment reduces LTV and monthly insurance.
Case study
Sarah wanted to buy a $300,000 house but was unsure about PMI. Using the calculator with a $30,000 down payment and a 0.5% rate, she saw a PMI of $1,350 and an LTV of 90%. She increased her down payment to $60,000, dropping PMI to $1,200 and LTV to 80%, saving $150 per month.