How is the yearly cost for PMI determined? I purchased an investment home last month for 62k. Yealy cost was 498.00. I am planning to purchase another investment home now and the yearly cost is $660. The selling prices is 52K. Can someone please explain how this cost is computed? I thought the PMI cost should be lower that my last property since the selling cost is much lower. Thanks!

PMI rates are determined by the LTV, Loan program (Arm is higher than fixed, etc), and transaction type (Cashouts are higher than Rate-term / Purchases and non-owner occupied is higher than owner occupied). And depending on the loan term and your credit score, the factor can change as well.

All these are broken into percentages and then multiplied by the loan amount to figure your yearly figure. So a 100% LTV conforming Fannie Mae owner occupied 30 year fixed would have 35% MI coverage with a rate of 1.09. So on a $ 100,000 loan your yearly MI would be $1090 or $90.83 per month.

For the most part the factors are consistant accross MI companies but if a lender self insures it may be lower or higher but the big players like GE, RMIC, PMI, UGI, etc are pretty consistant.