Quick Answer

For a $400,000 home with a $360,000 loan (90% LTV) and a credit score of 760+, the estimated monthly PMI is approximately $84 and the estimated annual PMI is approximately $1,008.

Home value ($)

Loan amount ($)

Credit score range 760+ 740 to 759 720 to 739 700 to 719 680 to 699 Below 680

Higher credit scores typically receive lower PMI rates.

Common Examples

Input	Result
$400,000 home, $360,000 loan, credit 760+	Estimated monthly PMI: approximately $84 (0.28% annual rate)
$300,000 home, $270,000 loan, credit 700-719	Estimated monthly PMI: approximately $131 (0.58% annual rate)
$500,000 home, $475,000 loan, credit 740-759	Estimated monthly PMI: approximately $257 (0.65% annual rate)
$350,000 home, $315,000 loan, credit 720-739	Estimated monthly PMI: approximately $116 (0.44% annual rate)
$250,000 home, $237,500 loan, credit <680	Estimated monthly PMI: approximately $267 (1.35% annual rate)

How It Works

PMI rates are based on two factors: the loan-to-value (LTV) ratio and the borrower’s credit score. The LTV ratio measures how much of the home’s value is financed by the mortgage.

Loan-to-Value Ratio

LTV = (Loan Amount / Home Value) x 100

A higher LTV means a smaller down payment and greater risk for the lender, which results in a higher PMI rate.

Annual PMI cost

Annual PMI = Loan Amount x (PMI Rate / 100)

Monthly PMI = Annual PMI / 12

Where:

• Loan Amount = the mortgage balance
• Home Value = the appraised value or purchase price
• PMI Rate = the annual PMI rate as a percentage, determined by LTV band and credit score tier

PMI rate table (approximate industry averages)

Credit score	LTV 80-85%	LTV 85-90%	LTV 90-95%	LTV 95-97%
760+	0.17%	0.28%	0.43%	0.55%
740-759	0.22%	0.33%	0.52%	0.65%
720-739	0.30%	0.44%	0.65%	0.82%
700-719	0.39%	0.58%	0.83%	1.05%
680-699	0.52%	0.78%	1.05%	1.30%
Below 680	0.75%	1.05%	1.35%	1.60%

Rates vary by lender, loan type, and other factors. These are approximate averages for conventional loans.

Removing PMI

Under the Homeowners Protection Act (HPA), borrowers can request PMI cancellation when the mortgage balance reaches 80% of the original home value. Lenders are required to automatically terminate PMI when the balance reaches 78% of the original value. Some lenders also allow cancellation based on a new appraisal showing the home has appreciated enough to put the LTV at or below 80%.

Worked example

For a $400,000 home with a $360,000 loan and a credit score of 760+: LTV = ($360,000 / $400,000) x 100 = 90%. The 90% LTV falls in the 85-90% band. For the 760+ credit tier, the approximate PMI rate is 0.28%. Annual PMI = $360,000 x 0.0028 = $1,008. Monthly PMI = $1,008 / 12 = $84. To reach 80% LTV, the loan balance would need to drop to $320,000, requiring approximately $40,000 in additional equity through payments or appreciation.

For a $300,000 home with a $270,000 loan and a credit score of 700-719: LTV = ($270,000 / $300,000) x 100 = 90%. The PMI rate for the 85-90% band at the 700-719 tier is 0.58%. Annual PMI = $270,000 x 0.0058 = $1,566. Monthly PMI = $1,566 / 12 = $130.50. Equity needed to remove PMI = $270,000 - ($300,000 x 0.80) = $30,000.

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Frequently Asked Questions

What is private mortgage insurance (PMI)?

PMI is insurance that protects the mortgage lender if the borrower defaults on the loan. It is typically required on conventional mortgages when the down payment is less than 20% of the home's value. The borrower pays the premium, usually as a monthly addition to the mortgage payment. PMI does not protect the borrower or build equity.

When can PMI be removed?

Under the Homeowners Protection Act, you can request PMI cancellation once your mortgage balance reaches 80% of the original purchase price or appraised value (whichever is less at origination). The lender must automatically cancel PMI when the balance reaches 78%. You need to be current on payments and have no subordinate liens. Some lenders also allow early removal based on a new appraisal if the home has appreciated.

How is FHA mortgage insurance different from conventional PMI?

FHA loans charge a mortgage insurance premium (MIP) rather than PMI. FHA MIP includes an upfront premium of 1.75% of the loan amount (usually rolled into the loan) plus an annual premium of 0.55% for most borrowers. A key difference is that FHA MIP cannot be canceled on loans with less than 10% down; it lasts for the life of the loan. Conventional PMI can be removed once you reach 20% equity.

How can I avoid paying PMI?

The most direct way is to make a down payment of 20% or more. Other options include VA loans (no PMI for eligible veterans regardless of down payment), piggyback loans (an 80/10/10 structure using a second mortgage instead of PMI), and lender-paid mortgage insurance (LPMI), where the lender covers PMI in exchange for a higher interest rate. Each option has trade-offs in total cost.

What is lender-paid mortgage insurance (LPMI)?

LPMI is an arrangement where the lender pays the mortgage insurance premium and passes the cost to the borrower through a slightly higher interest rate. The advantage is no separate monthly PMI charge. The disadvantage is the higher rate lasts for the life of the loan and cannot be removed like borrower-paid PMI. LPMI may cost more over the full loan term but can result in a lower total monthly payment in the early years.