Can you avoid PMI with a small down payment?

3 Replies

Are there any ways to avoid paying PMI with a less-than-20% down payment? Trying to cut costs any way possible. Thanks! Happy Easter!!!
I believe Brie is 100% correct.
Originally posted by @Joshua Matowitz :
Are there any ways to avoid paying PMI with a less-than-20% down payment? Trying to cut costs any way possible.

Thanks!

Happy Easter!!!

 You can avoid paying monthly, but you can't avoid it entirely. 

- Pay monthly. What most people do, without really giving it any thought. 

- Buy the policy out up-front one-time. For example 10% down with great credit, it might be 1.4%. So 10% down + 1.4% PMI buyout ==> never make a monthly PMI payment. If your mortgage guy structures it such that the 1.4% appears on the settlement paperwork as discount points, you might be able to write it off. Talk to your tax pro.

- Bake it into a bumped interest rate, or bake it into the loan being an ARM. This is often advertised as "No PMI." If your tax professional says that in your financial scenario you can write off mortgage interest but not PMI, this can make sense. (If some tax pro wants to comment on how likely that is with the tax reform that was just enacted, that would be great, since I haven't read a comprehensive primer on this topic from a tax professional yet!)

- Call me and I'll set you up with a special program because you're [insert thing here] and we can waive the PMI entirely. April fools, this is a variant on the above where it's advertised as "No PMI" by baking it in somewhere else. Doctors, known for being exceptionally smart and high income, often with little to put towards a down payment, but also known for being bad at math and personal finances, often go for this one (minus the April Fools disclaimer). 

- VA loan for an owner occupant. I see that you're in the military, now that I've typed all the above up. But I'm not going to erase the above, someone else might benefit.

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