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Mortgage Calculator With Extra Payments Pmi

Mortgage Payment Formula:

\[ M_{total} = M + PMI \]

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1. What is a Mortgage Calculator With Extra Payments PMI?

Definition: This calculator estimates mortgage payments including principal, interest, and PMI (Private Mortgage Insurance), with the option to include extra payments to reduce the loan term.

Purpose: It helps homebuyers understand their full monthly payment and how extra payments can shorten the loan term and reduce total interest.

2. How Does the Calculator Work?

The calculator uses the formula:

\[ M_{total} = M + PMI \]

Where:

Explanation: The calculator first determines the base P&I payment using standard amortization formulas, adds PMI, then shows the impact of extra payments on payoff time.

3. Importance of PMI and Extra Payments

Details: PMI is typically required for loans with less than 20% down payment. Extra payments directly reduce principal, shortening the loan term and saving thousands in interest.

4. Using the Calculator

Tips: Enter the loan amount, interest rate, loan term, PMI rate (typically 0.3%-1.5%), and any planned extra monthly payment.

5. Frequently Asked Questions (FAQ)

Q1: When is PMI required?
A: PMI is typically required when your down payment is less than 20% of the home's value.

Q2: How can I remove PMI?
A: PMI can usually be removed when you reach 20% equity, either through payments or home value appreciation.

Q3: How do extra payments affect my loan?
A: Extra payments reduce principal faster, shortening the loan term and reducing total interest paid.

Q4: What's a typical PMI rate?
A: PMI rates typically range from 0.3% to 1.5% of the loan amount annually, depending on credit and LTV.

Q5: Should I pay PMI or make a larger down payment?
A: If possible, a 20% down payment avoids PMI, but paying PMI may allow earlier homeownership with proper budgeting.

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