How Do You Calculate PMI Insurance Rates?

How Do You Calculate PMI Insurance Rates?

Borrowers can calculate their Property Mortgage Insurance rates by multiplying the home loan with the borrower's specified rate and dividing this number by 12, notes the Bankrate website. PMI is not typically required when borrowers put down 20 percent as a down payment.

Property Mortgage Insurance is insurance that lenders may require the homeowner to purchase for their home loan, states the Zillow website. PMI is typically required when home purchasers use less than 20 percent of the home's purchase price as a down payment.

To calculate PMI insurance rates:

  1. Determine the down payment
  2. Identify how much of a down payment will be used on the purchase of the home. If it is larger than 20 percent, the loan will not likely require PMI. Divide the down payment amount by the purchase price of the home to determine the percent down.

  3. View the PMI table
  4. Different lenders have different rates for PMI based on the amount down and the lender's credit. Identify the rate based on the current credit score and amount down.

  5. Multiply the loan amount with the rate
  6. Once the PMI percentage rate is identified, multiply this percentage rate with the loan amount. This number identifies the yearly PMI amount. Divide this amount by 12 to determine the monthly PMI cost.