How is PMI Calculated?

The cost of PMI (Private Mortgage Insurance) is based on several factors. These include: loan-to-value, the amount of the mortgage, the type of mortgage (fixed, adjustable, 30-year, 15-year, etc.), your credit score, and your state. Private mortgage insurance rates vary by company as well. What does “Loan-to value” mean? This is the percentage of the value of the home you are financing. Let’s say the home is worth $100,000 and you put $5,000 down. This means you are financing $95,000, or 95% of the value of the house. Your loan-to-value is .95. The higher the loan-to-value, the more expensive is your PMI. The lower your loan-to-value, the cheaper is your PMI. If your loan-to-value drops below .80 you will be allowed to drop your PMI. There are numerous websites to help you calculate the cost of pmi, and here is one: