Underwriting Guidelines

How to Calculate MI

Calculating an estimate for mortgage insurance is fairly simple math. In fact, it’s as easy as 1, 2, 3.

A quick case study:

Step 1: Determine the loan-to-value (LTV)

For example, assuming the property selling price is $100,000 and the borrower makes a $5,000 downpayment (5%), then the loan-to-value is 95%.

Step 2: Determine the MI rate

Mortgage insurance rates vary depending on coverage percentage, mortgage types and other variables. For this example, we will use the standard Fannie Mae®/Freddie Mac® coverage for a 30-year fixed-rate 95% LTV mortgage.

PMI’s monthly rate for this example is .78%. Visit PMI Rates for monthly rates, or check with your PMI representative for the most current rate information.

Step 3: Do the math.

Simply multiply the loan amount ($95,000) by the MI rate (.78%) divided by 12 months.

To show the work:

• $95,000 x .78% = $741
• $741 divided by 12 = $61.75 monthly premium (estimate only)

For faster calculation use our Rate Quote Calculator.