The traditional way to avoid paying PMI on a mortgage is to take out a piggyback loan.
In that event, if you can only put up 5 percent down for your mortgage, you take out a second “piggyback” mortgage for 15 percent of the loan balance, and combine them for your 20 percent down payment.
Can you avoid PMI with 10 percent down?
How to avoid PMI with a “piggyback loan” Another option is to use “piggyback financing”, but this will require a down payment of 10 percent, usually. The most common piggyback loan arrangement is an 80% first mortgage, a 10% second mortgage, and a 10% downpayment. This structure is often called an 80/10/10.
Should I avoid PMI?
Avoid PMI if you can do so comfortably. But it’s no catastrophe if you end up paying it for a while. PMI is insurance to protect the lender if you stop making mortgage payments. It’s charged if your down payment is less than 20% of the home’s value, typically your purchase price.
Is PMI required by law?
If you put down less than 20%, banks will require it. It’s not a law as far as I know, just a contingency on obtaining a mortgage. If you are asking about PMI (private mortgage insurance), than PMI is insurance payable to a lender or trustee for a pool of securities that may be required when taking out a mortgage loan.
Is 20 down required for a home loan?
The minimum down payment required for a conventional loan is 3%. And the minimum down payment for an FHA loan is 3.5%. Some special loan programs even allow for 0% down payments. But still, a 20% down payment is considered ideal when purchasing a home.