How Do You Avoid PMI?


Quick Answer

You can avoid paying private mortgage insurance by offering a down payment of at least 20 percent of your home's full purchase price. If you qualify, you might also be able to choose a piggyback mortgage, which allows you to take out two simultaneous mortgages.

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Full Answer

Buyers who don't have the finances to make a 20-percent down payment on a home may have no choice but to apply for a piggyback mortgage. With this type of mortgage, the first mortgage pays a large percentage of the home's full purchase price, the second mortgage pays a smaller percentage, and the down payment pays the rest. Buyers can also secure lender-paid mortgage insurance that adds PMI to the mortgage interest rate.

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