Are you tired of paying monthly Private Mortgage Insurance (PMI)? Use our PMI Removal Calculator to determine if your home equity has reached the required threshold (typically 20%) to eliminate PMI and lower your monthly mortgage payments.
PMI Removal Calculator
Enter your details and click calculate to see eligibility.
PMI Removal Calculator Formula:
Source: Consumer Financial Protection Bureau (CFPB), Investopedia
Variables:
- Current Home Value: The estimated market value of your property today.
- Current Loan Balance: The remaining principal amount you owe on your mortgage.
- Original Purchase Price: The price you paid for the home when you bought it.
What is a PMI Removal Calculator?
A PMI Removal Calculator is a specialized financial tool designed to help homeowners track their Loan-to-Value (LTV) ratio. Under the Homeowners Protection Act, you have the right to request PMI cancellation once your LTV reaches 80% based on the original value or current market value (subject to lender approval and appraisal).
This tool helps you visualize how close you are to that “magic number” of 20% equity. By identifying the gap, you can decide whether to make a lump-sum principal payment or order a new appraisal to prove market appreciation.
How to Calculate PMI Removal (Example):
- Identify your Current Loan Balance (e.g., $300,000).
- Estimate your Current Home Value (e.g., $400,000).
- Divide the balance by the value: $300,000 / $400,000 = 0.75.
- Multiply by 100 to get the percentage: 75%.
- Since 75% is less than 80%, you are likely eligible to request removal!
Frequently Asked Questions (FAQ):
When is PMI automatically removed?
Lenders are required by law to automatically terminate PMI when your loan balance reaches 78% of the original value of your home, provided you are current on payments.
Do I need a new appraisal?
If you are basing your request on home price appreciation rather than just principal paydown, most lenders will require a new professional appraisal to verify the current value.
Can I remove PMI on an FHA loan?
For most FHA loans issued after 2013, Mortgage Insurance Premium (MIP) usually lasts for the entire life of the loan. You typically need to refinance into a conventional loan to remove it.
How much does PMI cost?
PMI typically costs between 0.5% to 1.5% of the entire loan amount annually, which can add hundreds of dollars to your monthly mortgage payment.