What a home costs each month
The monthly cost of owning is the mortgage payment plus everything the house itself needs. The servicer collects principal, interest and usually taxes and insurance through escrow;[6] upkeep and repairs come out of your own pocket. In this example:
| Item | Paid to | Per month |
|---|---|---|
| Principal and interest | Servicer | $2,573.10 |
| Property tax | Servicer (escrow) → county | $425.00 |
| Homeowners insurance | Servicer (escrow) → insurer | $175.00 |
| PMI (until it ends) | Servicer → mortgage insurer | $159.38 |
| Upkeep allowance (1% a year) | You, as repairs come up | $354.17 |
| Monthly cost of owning | $3,686.64 |
The upkeep line is an assumption, not a statistic: set it to what your house is likely to need. The rate is Freddie Mac's 30-year average for the week of Nov 12, 2026;[1] replace it with the rate on your Loan Estimate. For the payment alone and its amortization table, use the mortgage payment calculator.
When PMI comes off
On a conventional loan, PMI has three end points under the Homeowners Protection Act: you may ask to cancel it once the balance reaches 80% of the original value, it ends automatically when the balance is scheduled to reach 78%, and it must end the month after the loan's midpoint even if neither has happened.[3][4] PMI protects the lender, not you, which is why the law limits how long you pay it.[2]
| Rule | Balance | Reached on schedule after |
|---|---|---|
| You may request cancellation | $340,000 (80%) | 8 yr 6 mo |
| Automatic termination | $331,500 (78%) | 9 yr 9 mo |
| Final termination (midpoint) | any | 15 yr |
Requesting at 80% saves 1 yr 3 mo of PMI here, about $2,391, but the request has conditions, such as a good payment history and no drop in the home's value.[3] Extra principal payments reach both thresholds sooner; the LTV calculator shows the pay-down needed.
How the down payment changes the cost of owning
A bigger down payment lowers the loan, the payment and how long PMI lasts. With everything else the same:
| Down payment | Loan | Monthly cost | PMI lasts | PMI paid in total |
|---|---|---|---|---|
| 5% | $403,750 | $3,838 | 11 yr 11 mo | $24,057 |
| 10% | $382,500 | $3,687 | 9 yr 9 mo | $18,647 |
| 15% | $361,250 | $3,535 | 6 yr 9 mo | $12,192 |
| 20% | $340,000 | $3,241 | none | $0 |
Cost of owning over the years you stay
Over a holding period, part of what you pay comes back as equity and part does not. Principal repaid builds equity; interest, PMI, taxes, insurance, dues and upkeep are the cost of living there. This is the number to set against renting or against closing costs you will pay when you buy; the rent vs buy calculator runs that comparison year by year, including what the down payment could earn invested:
| Years | Interest paid | Principal repaid (equity) | Non-recoverable cost | Per month on average |
|---|---|---|---|---|
| 3 | $80,361 | $12,270 | $120,449 | $3,346 |
| 7 | $182,872 | $33,269 | $276,409 | $3,291 |
| 10 | $255,349 | $53,423 | $388,496 | $3,237 |
| 15 | $364,982 | $98,176 | $555,379 | $3,085 |
The average non-recoverable cost per month falls the longer you stay, because PMI ends and each year's payment carries less interest. The figures leave out changes in the home's value, tax deductions and selling costs.
FHA loans: mortgage insurance works differently
FHA mortgage insurance does not follow the PMI cancellation rules. FHA charges an upfront premium of 1.75% of the base loan and an annual premium; on a 30-year loan of $726,200 or less it is 0.50% a year at 95% LTV or below and 0.55% above, and it lasts 11 years only if the loan starts at 90% LTV or less, otherwise for the whole term.[5]
| Loan-to-value at the start | Annual MIP | How long |
|---|---|---|
| 90% or less | 0.50% | 11 years |
| Over 90% to 95% | 0.50% | Loan term |
| Over 95% | 0.55% | Loan term |
VA-backed purchase loans are different again: they carry a one-time funding fee instead of monthly mortgage insurance; the VA mortgage loan calculator shows that payment.
Getting out of mortgage insurance earlyOn a conventional loan, extra principal or a new appraisal after the value rises can move the 80% date forward. On an FHA loan that keeps MIP for the full term, the usual way out is a refinance into a loan without it; compare the closing costs with the premiums you would save.
Frequently asked questions
When does PMI come off a mortgage?
You can ask to cancel it when your balance reaches 80% of the home's original value; it ends automatically when the balance is scheduled to hit 78%, and no later than the month after the loan's midpoint.[3] In this example that is after 8 yr 6 mo, 9 yr 9 mo and 15 yr.
What is included in a home mortgage payment?
Principal and interest, and usually property tax and homeowners insurance collected into escrow. PMI and HOA dues are added if they apply. Repairs and maintenance are not part of the payment but are part of the cost of owning.
How much does it cost to own a home per month?
Add the mortgage payment, escrow, PMI, dues and an upkeep allowance. For a $425,000 home with 10% down at 7.11% and the taxes and insurance shown here, that is about $3,687 a month.
Does FHA mortgage insurance ever go away?
Only after 11 years, and only if the loan started at 90% loan-to-value or less. Otherwise the annual premium lasts for the full term.[5]
Sources
- Primary Mortgage Market Survey (PMMS)
- What is private mortgage insurance?
- Homeowners Protection Act, 12 U.S.C. § 4902 (cancellation and termination of private mortgage insurance)
- When can I remove private mortgage insurance (PMI) from my loan?
- Mortgagee Letter 2023-05: Reduction of FHA Annual Mortgage Insurance Premium Rates
- What is an escrow or impound account?