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You can get a home loan with less than a 20% down payment, but you'll probably have to pay for mortgage insurance.
How much is PMI?
The average cost of private mortgage insurance, or PMI, for a conventional home loan ranges from 0.58% to 1.86% of the original loan amount per year, according to Genworth Mortgage Insurance, Ginnie Mae and the Urban Institute. The calculator estimates how much you'll pay for PMI, which can help you determine how much home you can afford.
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How the PMI calculator works
NerdWallet’s PMI calculator uses your home price, down payment, mortgage interest rate, mortgage insurance rate and loan term to estimate the cost of PMI.
Many borrowers don’t mind paying PMI if it means they can buy a house sooner. But if the added cost of PMI pushes you over your monthly budget, you may want to shop in a lower price range or postpone homebuying until your financial situation improves.
How to calculate your PMI cost
The PMI calculator starts by asking for the price of the home you want to buy and your anticipated down payment amount to calculate a down payment percentage. If this percentage is under 20%, it’s likely that you’ll have to pay for private mortgage insurance.
With this and other loan details, the calculator estimates your monthly PMI cost. The calculator also estimates the total amount you’ll pay for mortgage insurance until you have 20% equity and can get rid of PMI.
Follow these steps to use the calculator.
Enter the amount you plan to spend on a home. For the most accurate results, enter the amount for which you’re already pre-qualified or been preapproved, but you can also enter your best guess of how much you can afford.
Enter a down payment amount. This is the amount of cash you plan to pay upfront for the home.
Enter an interest rate. If you don’t yet have a personalized interest rate quote from a lender, click the link underneath the entry field to see today’s average mortgage rate and use it as an estimate.
Enter a mortgage insurance rate. When shopping lenders, ask for their typical PMI rates. If you’re not sure what your mortgage insurance rate will be, choose a rate somewhere in the middle of the typical range — 0.58% to 1.86%.
Enter a loan term. The 30-year term is the most common, especially among first-time home buyers. With a 15-year mortgage, you'll pay off the loan faster and pay less interest, but have higher monthly payments.
Once everything is entered, you should see the following results:
Your monthly PMI cost.
The total PMI amount you’ll pay until you reach 20% equity.
An estimate of your full mortgage payment, including PMI.
The total cost of your loan over its full term.
You can also get a detailed version of results broken down by monthly and total costs. Just check the box of the option you’d like to see.
