Skip to content

    Under active development. New calculators and features ship every week. Everything currently runs free while the site matures — pricing pages are a preview, checkout is not open yet.

    Search ⌘K
    Calculates locally in your browser · down payment saving and PMI
    Mortgage / down payment

    Down payment and mortgage insurance

    Two thresholds decide the answer and they are different thresholds. Twenty percent avoids private mortgage insurance altogether. Seventy-eight percent of the original value is where the Homeowners Protection Act requires the servicer to cancel it — which is why a 10% down loan still ends up cheaper than a 5% one, just later.

    PMINoneSaved$40,000Projected$80,740
    Down payment target
    $80,000
    20.0% of $400,000
    Time to reach it
    24 mo
    2.0 years at $1,500 a month
    Loan and LTV
    80.0%
    $320,000 borrowed
    Mortgage insurance
    $0
    none at 20% down
    The saving plan
    Twenty percent avoids mortgage insurance; 78% is where the servicer must cancel it.
    24 months
    The saving plan
    ItemValueNote
    Purchase price$400,000as entered
    Target down payment$80,00020.0%
    Already saved$40,000starting balance
    Monthly contribution$1,500growing at 4.0%
    Months to target24with monthly compounding
    Projected savings$80,740at the target date
    Loan amount$320,000price less down payment
    LTV at purchase80.0%no PMI
    Monthly PMI$00.50% of the loan a year
    Months of PMI0until the balance reaches 78% of value
    Total PMI$0over that period

    At 20% down there is no mortgage insurance at all, which is worth more than the rate difference between most quotes.

    Inspect the model
    Choose a quick result view, a scaled comparison, or the complete diagnostic set.
    Months to each down payment
    The last five points cost as much time as the first fifteen.
    Months to each down payment0.0008.2616.5224.7833.0441.300.0003.5%3.5%0.0005%5%0.00010%10%13.0015%15%24.0020%20%35.0025%25%Months
    Savings balance against time
    Contributions dominate early; compounding takes over later.
    Savings balance against time0.0003.322e+46.643e+49.965e+41.329e+51.661e+50 mo0 mo12 mo12 mo24 mo24 mo36 mo36 mo48 mo48 mo60 mo60 moBalance
    Canonical equations
    The exact relationships implemented by this engine.

    price × down payment share · What has to be saved.

    S(1+i)^n + c((1+i)^n − 1)/i · Monthly compounding.

    (price − down) / price · Drives the PMI decision.

    loan × rate / 12 · Until 78% LTV, per the HPA.

    finance methodology

    A clear path from inputs to results.

    Two thresholds decide the answer and they are different thresholds. Twenty percent avoids private mortgage insurance altogether. Seventy-eight percent of the original value is where the Homeowners Protection Act requires the servicer to cancel it — which is why a 10% down loan still ends up cheaper than a 5% one, just later.

    Step-by-step methodWorked exampleAssumptions explained

    How to use

    1. Enter the purchase price and the down payment you are targeting.
    2. Add what you have saved and what you can save each month.
    3. Set the return on the savings and the mortgage rate.
    4. Read the time to target and the mortgage insurance cost at that LTV.

    The formula

    Sn=S0(1+i)n+c (1+i)n−1iS_n = S_0(1+i)^n + c\,\frac{(1+i)^n - 1}{i}

    Reference: Homeowners Protection Act, 12 USC §4902, for the 78% automatic termination and 80% request thresholds.

    Worked example

    $400,000 purchase, 20% target

    Inputs
    • $400,000 price, 20% down.
    • $40,000 already saved, $1,500 a month, 4% return.
    • Mortgage at 6.5%, PMI at 0.5% a year.
    Calculation path
    1. 1

      The target is $80,000, so $40,000 has to be accumulated.

    2. 2

      At $1,500 a month and 4%, that takes 24 months.

    3. 3

      At 20% down the LTV is exactly 80%, so no PMI is charged.

    4. 4

      At 10% down the LTV is 90% and PMI applies at about $120 a month.

    5. 5

      PMI then runs until the balance reaches 78% of the original value, roughly a decade on a 30-year schedule.

    Result

    24 months · no PMI at 20% · about $14,000 of PMI at 10%.

    Interpreting the result

    The last five points of down payment cost as much time as the first fifteen, which is why 20% is a cliff rather than a slope: below it you pay insurance, above it you do not. The decision is whether the PMI saved is worth the months of waiting, and at current PMI rates it usually is.

    Assumptions & limitations

    • Savings compound monthly at the stated return.
    • PMI is charged above 80% LTV and terminates at 78% of the original value.
    • A 30-year fixed mortgage at the stated rate.
    • Closing costs, taxes and insurance are separate.

    Frequently asked questions

    Is 20% down still necessary?

    No — 3.5% FHA and 3% conventional loans exist. But below 20% you pay mortgage insurance, and on an FHA loan above 90% LTV that insurance is permanent.

    Should I wait or buy sooner?

    Waiting saves the PMI but costs the rent and any appreciation. The comparison is PMI plus the mortgage payment against rent over the same months.

    What about a piggyback loan?

    An 80-10-10 structure avoids PMI by splitting the financing into a first and a second mortgage, at the cost of a second rate — worth comparing when PMI is expensive.

    When does PMI actually stop?

    Automatically at 78% of the original value on the amortisation schedule, or on request at 80% with a good payment history. Appreciation does not count for the automatic termination.

    Can I use gift money?

    Yes, most loan programmes allow gifted down payment funds with a letter documenting the source.

    Methodology last reviewed 2026-10-22. Results are informational and not financial or engineering advice — see our disclaimer.