PMI is priced on two numbers: your credit score and your loan-to-value ratio (LTV), which is the loan amount divided by the home's value. The mortgage insurance company sets the rate as a yearly percentage of the loan, and your lender divides it into 12 monthly charges. A borrower near 620 with 3% down sits at the top of the scale, and a borrower at 760 with 15% down sits near the bottom.
PMI rates by credit score and down payment
These are the yearly rates QualRate's calculator uses. Your actual rate comes from the mortgage insurance company once the loan is priced, and it can run a little above or below these.
| Credit score | 3% down | 5% down | 10% down | 15% down |
|---|---|---|---|---|
| 620 | 1.50% | 1.28% | 0.98% | 0.60% |
| 660 | 1.20% | 1.02% | 0.78% | 0.48% |
| 700 | 0.91% | 0.77% | 0.59% | 0.36% |
| 740 | 0.61% | 0.52% | 0.40% | 0.24% |
| 760 and up | 0.46% | 0.39% | 0.30% | 0.18% |
At 20% down there's no PMI at all, because the loan is 80% of the value or less.
A worked example on a $300,000 home
With 3% down on a $300,000 single-family home, the down payment is $9,000 and the loan is $291,000. Principal and interest at a 5.75% rate is $1,698.20 a month. Here's what PMI adds at three scores:
| Credit score | Yearly rate | Yearly PMI | Monthly PMI |
|---|---|---|---|
| 620 | 1.50% | $4,365.00 | $363.75 |
| 700 | 0.91% | $2,635.63 | $219.64 |
| 760 | 0.46% | $1,338.60 | $111.55 |
The 700 row uses the calculator's exact rate of 0.906%, which the table above rounds to 0.91%. The spread between 620 and 760 is $252.20 a month on the same house, which is why your score counts for more on Conventional than on any other program.
For comparison, FHA on the same home with 3.5% down has a $289,500 base loan and an annual premium of 0.55%, or $132.69 a month at any score, plus a 1.75% upfront premium added to the loan. Counting FHA's financed upfront premium, FHA usually costs less each month near 620. Above about 740, Conventional usually wins, and its PMI has an end date.
When PMI comes off
The Homeowners Protection Act gives three exits on a home you live in:
- At 80%, by request. Once your balance is scheduled to reach 80% of the original value, you can ask the servicer in writing to cancel PMI. You need a good payment history, no second mortgage, and possibly proof the value hasn't dropped.
- At 78%, automatically. The servicer must end PMI when the balance is scheduled to reach 78% of the original value, as long as you're current.
- At the midpoint. On a 30-year loan, PMI ends after 15 years, again if you're current.
On the $291,000 loan above, 80% of the $300,000 original value is $240,000. The regular payments reach it at payment 124, about 10 years and 4 months in. The automatic 78% line, $234,000, arrives at payment 135. An extra $200 a month toward principal reaches $240,000 at payment 83, a little under 7 years, because a request at 80% can be based on the balance you've actually paid down. Fannie Mae and Freddie Mac rules can allow earlier cancellation than the law requires, and your servicer can tell you their terms.
How to pay less PMI
- Raise the score before closing. Moving from 620 to 700 cuts the monthly PMI on this loan by $144.11. Paying a card balance down, followed by a rapid rescore, can move you up a tier within weeks.
- Put a little more down. Going from 3% to 5% at a 700 score drops the rate from about 0.91% to 0.77%. A gift from a relative can cover the extra.
- Use FHA when the score is low. FHA's premium doesn't change with your score, so it usually costs less each month below about 740.
- Look at VA. Eligible veterans and service members pay no monthly mortgage insurance at all.
The mortgage payment calculator puts PMI on its own line at your score and down payment. Call AAA Capital Funding at 888-601-8344 and we'll quote Conventional with PMI against FHA on the same home so you see which payment is lower.