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How to calculate private mortgage insurance

By
Mortgage and Lending with Emery Federal Credit Union

As mentioned in other sections, there are two factors that determine how much mortgage insurance a home buyer will pay:  1) the type of loan and 2) the amount of down payment.  Using the chart below, you will see what percentage the home owner will have to pay for the outlined home loan programs.

% down30 year fixed15 year fixed1 year ARM
 5% 0.78% 0.72% 0.92%
 10% 0.52% 0.46% 0.65%
 15% 0.32% 0.26% 0.37%

Each lender will have a different rate chart that they use.  In general, the percentages listed above are the most common factors used when calculating mortgage insurance.

For a consumer to estimate the cost of mortgage insurance, use the following calculation to determine the monthly cost:

Loan amount x factor / 12

For example, if a home buyer is getting a 30 year fixed rate loan and putting 10 percent down on a home with a $100,000 loan, the mortgage insurance factor is 0.52% (or 0.0052).  To calculate the mortgage insurance, the calculation would be:

100000 x 0.0052 = 520 
520 / 12 = 43.33

The monthly mortgage insurance would be $43.33 per month or $520 per year. 

Comments (7)

Becky Troutt
No longer practicing real estate as of 2008. - Bradenton, FL
Thanks for that info!
May 24, 2007 05:10 AM
Kevin Phillipson
Emery Federal Credit Union - Dover, DE
NMLS: 167468

Short answer - Yes, but long answer - I like the fannie mae My Community for the 20% MI but now that the market is stablizing it is now alot more attractive to do 80/20's or 80/15/5's. MI is not as needed as it was a couple months ago.

May 24, 2007 05:26 AM
Victoria Small
Keller Williams Realty Chesterfield - Saint Louis, MO
Remember Small is the name...not the SERVICE!
This is an excellent tool. It will help when giving an estimate to the buyer of their closing cost or knowing approximately what their monthly payment will be. I plan to use this formula often.
May 24, 2007 05:36 AM
Michael Truiano
BHG Rand Realty - Nanuet, NY
Kevin, thanks for the info. Can you explain how to cancel pmi when finally eligible?  Im guessing the bank wont call me when im not required to have it anymore.  Thanks!
May 24, 2007 08:32 AM
Michael Truiano
BHG Rand Realty - Nanuet, NY
Kevin, thanks for the info. Can you explain how to cancel pmi when finally eligable?  Im guessing the bank wont call me when im not required to have it anymore.  Thanks!
May 24, 2007 08:33 AM
Rahil Pirani
Pirani Marketing Group - Rockford, IL
Kevin!  Great Post, I think a lot people always wondered, but this will help tremendously!
May 24, 2007 11:33 AM
Anonymous
terry moerler

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Dec 31, 2009 08:02 AM
#8