How Do I Calculate Mortgage Insurance?

To estimate monthly mortgage insurance, multiply your loan amount by the annual premium rate and divide by 12; any upfront charge is a percentage of the loan paid at closing or added to the loan. FHA loans charge 1.75% upfront plus 0.50% to 0.75% a year for most loans over 15 years. USDA loans charge 1% upfront plus 0.35% a year, VA loans charge a one-time funding fee of 1.25% to 3.3% with no monthly premium, and private mortgage insurance (PMI) on a conventional loan has a rate set by the insurer from your credit score and down payment.

Step 1: Find your loan amount and loan-to-value ratio

Every formula starts with two numbers:

• Loan amount: the purchase price minus your down payment.
• Loan-to-value ratio (LTV): the loan amount divided by the property value. On a purchase, the value is the lower of the sales price or the appraised value.

Example: a $400,000 home with 3.5% down ($14,000) has a $386,000 loan. LTV = $386,000 / $400,000 = 96.5%.

LTV sets which rate row applies on FHA and PMI loans, and it decides when PMI ends.

How do you calculate PMI on a conventional loan?

A conventional loan above 80% LTV, meaning less than 20% down, needs mortgage insurance. The formula is:

Monthly PMI = loan amount x annual PMI rate / 12

The insurer, not a federal rule, sets the rate. It rises with LTV and falls as your credit score rises. It also depends on the coverage percentage, the share of the loan the policy protects. Fannie Mae's standard coverage on a fixed-rate loan longer than 20 years is 12% at 80.01% to 85% LTV, 25% at 85.01% to 90%, 30% at 90.01% to 95%, and 35% at 95.01% to 97%.

The Urban Institute's September 2026 chartbook lists these annual PMI rates, from Enact Mortgage Insurance, for a $386,000 loan at 96.5% LTV with 25% coverage, the reduced level used for Fannie Mae's HomeReady and Freddie Mac's Home Possible loans:

Standard coverage at this LTV is 35%, a larger policy that is usually priced higher, so treat these as low-end estimates and get a quote from your lender.

Worked example (700 credit score): $386,000 x 0.79% = $3,049.40 a year, and $3,049.40 / 12 = $254.12 a month.

How long you pay it. Federal rules give you two main ways off PMI on a home you live in:

• Ask at 80%. You can request cancellation in writing once your balance reaches 80% of the home's original value. You need a good payment history, current payments, no second mortgage or other junior lien, and, if the servicer asks, proof such as an appraisal that the value has not fallen below the original value.
• Automatic at 78%. The servicer must end PMI when your balance is scheduled to reach 78% of the original value under the original payment schedule, as long as you are current.

On a 30-year loan at 7.32%, the October 22, 2026 Freddie Mac average, the $386,000 loan reaches 80% of value ($320,000) in month 141 and is scheduled to reach 78% ($312,000) in month 152. If the premium stayed at $254.12 a month the whole time, that would be about $35,830 if you request cancellation at 80%, or about $38,630 if you wait for automatic cancellation. Ask your lender whether the premium changes in later years of the policy, since that changes the total. Extra principal payments can get you to the 80% request point sooner, but they do not move the automatic date. Ways to avoid or remove PMI covers the other options.

How do you calculate FHA mortgage insurance?

FHA charges two premiums:

1. Upfront premium (UFMIP): 1.75% of the base loan amount. You can pay it in cash or add all of it to the loan.
2. Annual premium (MIP): a yearly rate paid in 12 monthly installments. FHA calculates it on your average loan balance for each year, so the charge drops a little each year.

Annual MIP rates for loans FHA endorsed on or after March 20, 2023:

Loans of 15 years or less above $726,200 use rates of 0.15% to 0.65%, depending on LTV.

Worked example: the same $400,000 home with 3.5% down on a 30-year FHA loan.

• UFMIP: $386,000 x 1.75% = $6,755. Financed, the loan becomes $392,755.
• First-year annual MIP: the LTV is over 95%, so the rate is 0.55%. A close estimate uses the base loan amount: $386,000 x 0.55% / 12 = about $177 a month. Your lender's figure will be slightly different because FHA works from your average balance over the year, and it falls a little each year.
• Duration: with LTV over 90% at the start, you pay annual MIP for the life of the loan unless you refinance or pay it off. Putting at least 10% down cuts the duration to 11 years.

For FHA's credit and down payment rules, see FHA loan requirements.

How do you calculate the USDA guarantee fee?

USDA guaranteed loans charge an upfront guarantee fee and an annual fee. For fiscal year 2027, which runs October 1, 2026 through September 30, 2027, USDA set them at:

• Upfront fee: 1.00% of the loan. You can pay it at closing or finance it, since USDA allows the loan to exceed the appraised value by the amount of the fee.
• Annual fee: 0.35% of the average scheduled unpaid balance for the year, paid monthly for the life of the loan.

Worked example: a $300,000 home with no down payment.

• Upfront fee paid at closing: $300,000 x 1% = $3,000. If you finance the fee instead, the lender calculates the exact amount on the larger loan.
• First-year annual fee: $300,000 x 0.35% / 12 = $87.50 a month, slightly less in practice because it is based on the average scheduled balance for the year.

USDA can change both fees each fiscal year. For who can get a USDA loan, see USDA loan requirements.

How do you calculate the VA funding fee?

VA loans have no monthly mortgage insurance. Instead, you pay a one-time funding fee, a percentage of the loan amount, which you can pay at closing or finance into the loan. Rates in effect since April 7, 2023 for purchase loans:

Worked example: a $400,000 home, first use.

• No down payment: $400,000 x 2.15% = $8,600. Financed, the loan is $408,600.
• 5% down ($20,000): $380,000 x 1.5% = $5,700.

You pay no funding fee if you receive VA compensation for a service-connected disability, are a surviving spouse receiving Dependency and Indemnity Compensation, or are an active-duty service member with a Purple Heart, among other exemptions VA lists.

For background on what each type of coverage is, see how mortgage insurance works. For conventional loan rules beyond mortgage insurance, see the requirements of a Fannie Mae or Freddie Mac loan.