How can I reduce mortgage insurance costs?

This calculator estimates your monthly payment for private mortgage insurance (PMI) over a range of down payments. If your down payment is at least 20% of the purchase price of your home, your lender does not require you to obtain mortgage insurance.

Mortgage lenders require mortgage insurance if the loan-to-value (LTV) ratio is greater than 80%. When you close a mortgage loan, the ratio may be greater than 80% but it may be reduced in a few years as you pay off your loan principal and the value of your home appreciates.

You may have to pay for an appraisal to substantiate that your home's loan-to-value ratio is 80% or less. The Homeowner's Protection Act (HPA), passed in 1998, mandates that lenders cancel mortgage insurance when the loan-to-value ratio reaches 78% based on the original amortization of the loan and without regard to the current value of the property.

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