How to use it
- Use the formula below with your own figures.
The formula
PMI ≈ 0.3%–1.5% of the loan per year.
Worked example
On a $240,000 loan, PMI near 0.5% adds about $100/month.
Frequently asked questions
When does PMI stop?
Usually once equity reaches 20–22%.
Can I avoid it?
Put 20% down or use a lender-paid option.
Tips
- Compare the total interest, not just the monthly payment.
- A larger down payment lowers both the loan and any insurance.
- Even small extra principal payments cut years off the term.
Key terms
- Principal
- The amount borrowed, before interest.
- Amortization
- Spreading repayment into equal periodic payments.
- Escrow
- Funds held for taxes and insurance.