Saving Money on Your Mortgage: Strategies to Avoid PMI


Buying a home is a significant investment, and many people need a mortgage to make it happen. Private Mortgage Insurance (PMI) is an added expense that comes with taking out a mortgage, and it can be a burden to pay for many years. Fortunately, there are ways to avoid paying PMI. In this article, we’ll explain how you can do it and save money in the process.

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Make a Larger Down Payment:

One of the most effective ways to avoid paying PMI is by making a larger down payment. Typically, lenders require PMI when a borrower puts down less than 20% of the home’s purchase price. By putting down 20% or more, you can avoid the need for PMI altogether. While it may seem daunting to come up with that much cash upfront, it can save you thousands of dollars in PMI fees over the life of your mortgage.

Consider a Piggyback Loan:

If you can’t afford to make a 20% down payment, you may still be able to avoid PMI by taking out a piggyback loan. This is a second mortgage that you take out at the same time as your primary mortgage. The piggyback loan covers the remaining balance of your down payment, so you can avoid PMI. However, it’s important to note that piggyback loans often come with higher interest rates than primary mortgages, so you’ll want to do your research before committing to one.

Look for Lender-Paid Mortgage Insurance:

Some lenders offer an alternative to PMI called Lender-Paid Mortgage Insurance (LPMI). With LPMI, the lender pays the cost of the mortgage insurance in exchange for a slightly higher interest rate on the loan. This can be a good option if you don’t have the cash for a large down payment but want to avoid paying PMI.

Get a VA Loan:

If you’re a veteran, you may be eligible for a VA loan. VA loans are backed by the Department of Veterans Affairs and don’t require PMI. To qualify for a VA loan, you must meet certain service requirements and have a Certificate of Eligibility (COE) from the VA. If you’re eligible, a VA loan can be a great way to avoid paying PMI.

Wait Until You’ve Built Up Enough Equity:

If none of the above options work for you, you may simply have to wait until you’ve built up enough equity in your home to drop PMI. Once you’ve paid off enough of your mortgage, typically around 20%, you can request to have PMI removed. Your lender may require an appraisal to confirm that your home’s value hasn’t declined since you purchased it. It’s important to note that even if you don’t request to have PMI removed, it will automatically drop off once you’ve paid off a certain percentage of your mortgage.


Avoiding PMI can save you thousands of dollars over the life of your mortgage. By making a larger down payment, taking out a piggyback loan, looking for Lender-Paid Mortgage Insurance, getting a VA loan, or waiting until you’ve built up enough equity, you can avoid the added expense of PMI. Remember, every dollar you save on PMI is a dollar you can put towards paying off your mortgage faster or saving for other important financial goals.

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