Research question
What does mortgage insurance cost per month at different LTVs, and how many years does it stay before the loan balance reaches 80% LTV (the automatic drop-off line)?
Dataset
- A $500,000 home at 6.71% (PMMS), 30-year fixed.
- LTVs of 95%, 90% and 85% (conventional, good-credit band).
- Automatic PMI drop-off at 80% LTV (monthly balance from the amortization schedule).
Methodology
- Annual MI rate = LTV-band × credit-band from the pricing matrix.
- Monthly MI = loan amount × annual rate ÷ 12.
- Walk the amortization schedule to the first year-end balance ≤ 80% of price.
Calculations
| LTV | Annual MI rate | Monthly MI | Drops (approx.) |
|---|---|---|---|
| 95% LTV | 1.00% | $396 | Year 11 |
| 90% LTV | 0.75% | $281 | Year 9 |
| 85% LTV | 0.50% | $177 | Year 5 |
Conventional, good-credit band; actual MI varies by lender/insurer. FHA uses a different structure.
Monthly mortgage insurance by LTV
On a $500,000 home, 30-yr.
95% LTV$396
90% LTV$281
85% LTV$177
Findings
- Higher LTV both raises the MI rate and enlarges the loan the rate applies to — the cost scales faster than the LTV itself.
- The drop-off year depends on the loan amount and rate, not just the down payment: lower LTVs reach 80% equity sooner.
- A larger up-front down payment removes MI entirely at 20% (80% LTV) — an ongoing saving, not just a one-time one.
Limitations
- Assumes home value is flat for the drop-off test; appreciation would lower the balance ratio faster.
- Conventional only — FHA MIP has different rates and duration rules.
- Borrowers should request cancellation in writing at 80%; automatic termination is at 78% by statute.
Sources
Last updated & change history
Last updated: 2026-09-21
- 2026-09-21 — Initial study.