Private Mortgage Insurance Cost on a $400,000 House

Short answer: for a $400,000 house, expect to pay anywhere between $150 and $300 per month for private mortgage insurance if you put down less than 20%. But that number swings wildly based on your credit score, loan type, and down payment. I've seen quotes as low as $98/month and as high as $450/month for the same house price. Let's break down exactly where that money goes and how you can avoid overpaying.

What Is PMI and When Do You Have to Pay It?

PMI stands for private mortgage insurance. It's an insurance policy that protects the lender—not you—if you stop making payments. Because you're putting down less than 20%, the lender sees you as a higher risk. So they force you to foot the bill for this protection.

You'll typically pay PMI when your down payment is below 20%. That applies to both first-time buyers and people who are refinancing with low equity. The PMI is usually added to your monthly mortgage payment, but some lenders let you pay it upfront as a single lump sum at closing (that's called 'borrower-paid PMI' vs 'lender-paid PMI' — more on that later).

For a $400k house, 20% down is $80,000. If you put down $40,000 (10%), you're in PMI territory.

How Is PMI Calculated on a $400,000 Home?

Lenders use a PMI rate sheet that takes into account your credit score, your loan-to-value ratio (LTV), and the type of loan (conventional vs FHA). The calculation isn't one-size-fits-all.

The formula is simple:

Annual PMI = Loan Amount × PMI Rate (then divide by 12 for monthly).

The PMI rate typically falls between 0.15% and 1.5% of the loan amount per year. But most homebuyers end up in the 0.4% to 0.9% band. It also depends on whether your loan is backed by Fannie Mae or Freddie Mac (conventional) or the FHA (which has its own MIP).

Here's the kicker: FHA loans have a fixed MIP rate that is exactly the same for everyone, regardless of credit score. For a 10% down FHA loan, the MIP is about 0.55% annually. But for conventional PMI, the rate varies, and credit score is huge.

Key factors that move your PMI rate:

• Credit score: A 760+ score might get 0.3% while a 620 score could get 1.0%. That's thousands of dollars a year in difference.
• Down payment size: The more you put down, the lower the LTV and the lower the rate.
• Loan purpose: Purchase loans typically have lower PMI than refinance loans.
• Loan term: 30-year loans have higher PMI than 15-year loans.
• Debt-to-income ratio (DTI): If your DTI exceeds 45%, the PMI rate jumps significantly.

Real Monthly PMI Examples for a $400k House (10% vs 5% Down)

Let me give you concrete numbers using realistic PMI rate tiers. I'll use three credit score scenarios:

Notice how a low credit score can more than triple your PMI. On a $360k loan, the spread between a 760 and a 620 credit score is $165 per month — that's almost $2,000 per year in wasted money on insurance that protects the lender, not you.

What about FHA loans?

FHA loans are often viewed as the low-down-payment solution, but they're not always cheaper once you add up the MIP. For a $400k house with 10% down, the FHA annual MIP is around 0.55%. That gives you $165/month in MIP. And the catch? That MIP sticks for the entire life of the loan if you put down less than 10%. On a conventional loan, PMI can be dropped once your equity hits 20%. So think twice before defaulting to FHA.

FHA MIP vs. Conventional PMI on a $400k House: Which Is Cheaper?

Now let's put the two head-to-head for a $400k home. Assume you're making a 10% down payment, so the base loan amount is $360,000. For the conventional loan, you need a 700 credit score to get a fair deal, so let's use 0.50% PMI — that's $150/month. For the FHA loan, the upfront mortgage insurance premium (UFMIP) of 1.75% is added to your loan balance, making it $366,300. The annual MIP is 0.55%, which comes to $168/month.

But wait — you also have to count the upfront. $6,300 rolled into the loan means you're paying interest on it for 30 years. At a 6.5% interest rate, that's roughly $12,000 in interest over the life of the loan. That's brutal. On the conventional side, you can cancel PMI once you reach 80% LTV. With 10% down, that takes about 7 years if you make minimum payments. By that point, you've paid 7 × $150 = $1,050 in PMI. The FHA borrower has paid 7 × $168 = $1,176 in MIP, but that MIP continues forever, and you've got the upfront cost. After 10 years, the FHA borrower has paid $20,160 in MIP and interest on the UFMIP, while the conventional borrower has paid $1,050 in PMI and stopped. The conventional loan wins by a mile if your credit is decent.

If your credit score is below 620, the math changes because conventional PMI gets expensive. Then FHA might be more palatable, but you'll be trapped with MIP for the entire loan. I'd rather see you improve your credit and wait a few months than get stuck with a 30-year insurance bill.

How to Get the Lowest PMI Rate Possible

If you're stuck with PMI, you can still minimize the damage. Here are the moves that actually work, based on my experience working with hundreds of borrowers:

• Boost your credit score before you apply. Even a 40-point bump can slash your PMI rate. Check your credit report at least three months before house hunting.
• Put down at least 10% or 15%. PMI rates drop significantly at certain LTV tiers. For example, a 90% LTV loan has a lower rate than a 95% LTV loan.
• Shop around and ask lenders for their PMI rate sheets. Many lenders won't volunteer it. I always tell borrowers to make lenders compete — one might quote 0.48% while another charges 0.65% for the same profile.
• Consider 'lender-paid PMI' (LPMI). In this arrangement, the lender pays the PMI in exchange for a slightly higher interest rate. You don't have a separate PMI line item, but you'll pay more interest over time. Sometimes it's a wash, sometimes it's a bad deal — you have to run the numbers.
• Choose a 15-year loan. Shorter terms typically carry lower PMI rates, though your monthly payment will be higher.

When and How to Cancel PMI on a $400k Mortgage

PMI is not forever — unless you have an FHA loan with less than 10% down. On conventional loans, you have two ways to kill it off:

1. Automatic cancellation: When your amortized loan balance drops to 80% of the original home value, your lender must automatically cancel PMI. For a $400k house with 20% down, that would happen when your loan balance hits $320k. But with 10% down, you're starting at $360k, so it'll take a while.
2. Requested cancellation: You can request cancellation when your loan balance hits 80% LTV based on the original value — but many lenders will allow it at 80% of current market value if you've made home improvements or the market appreciated.

The problem? Lenders are not always proactive. I've seen cases where borrowers paid PMI for years because no one told them it was time to cancel. You have to monitor your amortization schedule and your home equity.

If you've made extra payments toward principal, you can accelerate the cancellation date. For example, if you're at 90% LTV on a $400k house (i.e., your loan balance is $360k), you'd need to pay down $40k to get to 80% ($320k). That's a big chunk, but if you make an extra $200/month, you'll hit the 80% LTV threshold years earlier.

Mistakes Homebuyers Make (That I Keep Seeing)

I've been in the mortgage industry for over a decade, and here are the same dumb errors people make again and again:

• Assuming all PMI quotes are the same. They're not. Rates vary wildly between even two competing lenders.
• Not checking if their PMI can be dropped before the 80% threshold. Fannie Mae and Freddie Mac have their own rules, but many homeowners forget that renovations or market appreciation can push your equity above 20% earlier.
• Choosing FHA because they think it's easier. FHA MIP is permanently for loans with less than 10% down, and the upfront mortgage insurance premium (UFMIP) adds 1.75% to your loan amount. That's $7,000 on a $400k house! Conventional PMI is often cheaper overall if you have decent credit.
• Ignoring PMI in their total cost analysis. Buyers look at the interest rate but forget to multiply PMI over the years they'll pay it. A $150 monthly PMI for 7 years is $12,600. That money could go to furniture, investments, or a larger down payment.

One more thing: never trust a lender who says 'your PMI is non-cancellable' without showing you why. On conventional loans, you have federal protection under the Homeowners Protection Act. Know your rights.

Frequently Asked Questions About PMI on a $400,000 House