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Nerdwallet Mortgage Calculator With PMI

Monthly Payment Formula (including PMI):

\[ M_{total} = P \times \frac{r \times (1 + r)^n}{(1 + r)^n - 1} + (P \times \frac{pmi_{rate}}{12}) \]

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1. What is a Mortgage Calculator with PMI?

Definition: This calculator estimates your total monthly mortgage payment including Principal, Interest, and Private Mortgage Insurance (PMI).

Purpose: It helps homebuyers understand their complete monthly housing costs when they can't make a 20% down payment.

2. How Does the Calculator Work?

The calculator uses the formula:

\[ M_{total} = P \times \frac{r \times (1 + r)^n}{(1 + r)^n - 1} + (P \times \frac{pmi_{rate}}{12}) \]

Where:

Explanation: The first part calculates the standard mortgage payment, while the second part adds the PMI cost.

3. Importance of PMI Calculation

Details: PMI typically costs 0.5%-1.5% of the loan annually and is required for loans with less than 20% down payment.

4. Using the Calculator

Tips: Enter your loan amount, interest rate, loan term, and PMI rate. The calculator shows your total payment plus the breakdown.

5. Frequently Asked Questions (FAQ)

Q1: How long do I pay PMI?
A: Typically until you reach 20% equity in your home, either through payments or appreciation.

Q2: Can I avoid PMI?
A: Yes, with a 20% down payment, lender-paid MI (higher rate), or piggyback loans (80-10-10 structure).

Q3: Does PMI vary by credit score?
A: Yes, borrowers with higher scores generally get lower PMI rates.

Q4: Is PMI tax deductible?
A: For some borrowers (AGI below $100k), consult a tax professional.

Q5: How accurate is this calculator?
A: It provides estimates; actual payments may include taxes/insurance which aren't calculated here.

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