computer-calculator-wooden-table Most everyone knows that buyers who put down less than 20% usually have to purchase Private Mortgage Insurance or PMI.

    But most people also have no idea how much PMI payments are.

    PMI payments can be made monthly, in a lump sum at closing, or as a combination of the two.

    Most of our borrowers opt for monthly payments, so they will be the focus of this blog.

    PMI payments depend on credit scores, loan-to-value ratios, debt ratios, property usage, and other factors.

    A great resource for estimating PMI payments is MGIC’s website, and its online rate card in particular.

    Below are several estimated PMI payments based on a $500,000 loan (assumes 30-year fixed mortgage, primary residence; debt ratios under 45%).

    The only variables below are loan-to-value (LTV) and credit scores:

    • 95% LTV + 760 Credit Score = $158 per month
    • 95% LTV + 680 Credit Score = $400 per month
    • 90% LTV + 760 Credit Score = $117 per month
    • 90% LTV + 680 Credit Score = $271 per month
    • 85% LTV + 760 Credit Score =  $79 per month
    • 85% LTV + 680 Credit Score = $117 per month

    A few things to note:

    1. PMI payments are relatively low (and a great deal) for strong borrowers with high credit scores.
    2. Credit scores affect PMI payments significantly.
    3. Borrowers with small down payments and low credit scores are sometimes better off obtaining FHA financing b/c FHA interest rates and MI rates are often lower for them.

    Jay Voorhees
    Founder/Broker | JVM Lending
    (925) 855-4491 | DRE# 01524255, NMLS# 335646

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