Down Payment & PMI Calculator
Your down payment does more than shrink the loan — at 20% it eliminates private mortgage insurance (PMI), a recurring cost that protects the lender, not you. This calculator shows how your down payment changes the loan, the monthly payment, and whether PMI applies.
How this calculator works
The down payment is a percentage of the price; the rest is financed:
down = price × down% | loan = price − down
The principal-and-interest payment comes from the standard amortization formula. If your down payment is under 20%, lenders require PMI. We estimate it at roughly 0.5% of the loan per year (a typical midpoint — actual PMI ranges by credit and loan-to-value), shown as a monthly add-on.
Why 20% is the magic number
At 20% down your loan-to-value ratio is 80%, the threshold at which PMI is waived. PMI typically costs 0.3–1.5% of the loan annually and adds nothing to your equity, so reaching 20% — or removing PMI later once you’ve built 20% equity — directly lowers your housing cost.
Frequently asked questions
- What is PMI and why do I pay it?
- Private mortgage insurance protects the lender if you default. It's required on most conventional loans when you put down less than 20%. It's a cost to you with no benefit to you, which is why avoiding or removing it matters.
- How do I get rid of PMI?
- Put 20% down to avoid it entirely, or once your loan balance falls to ~80% of the home's value (through payments or appreciation), you can usually request its removal; it often auto-terminates at 78%.
- Is a bigger down payment always better?
- It lowers your loan, payment, and interest, and can avoid PMI — but don't drain your emergency fund to do it. Balance the down payment against keeping cash reserves; the home affordability and mortgage calculators help you weigh it.
- Is the PMI figure here exact?
- No — it's an estimate (~0.5%/yr of the loan). Actual PMI depends on your credit score, loan-to-value, and insurer. Use it as a ballpark and confirm with your lender.