How to Avoid Paying Private Mortgage Insurance

How to Avoid Paying Private Mortgage Insurance | Valor Lending Group

Buying a home is an exciting journey, but the cost of Private Mortgage Insurance (PMI) can feel like an unwelcome surprise. Understanding How to Avoid Paying Private Mortgage Insurance can save you thousands of dollars over the life of your loan and make your monthly mortgage payment much more affordable. Whether you’re a first-time buyer or upgrading your home, knowing your options around PMI helps you keep more money in your pocket while getting into your dream home faster.

Let’s cover PMI basics and how to save.

What Is Private Mortgage Insurance and Why Do Lenders Require It?

Private mortgage insurance, or PMI, is a type of insurance that protects lenders when homebuyers put down less than 20% on a conventional loan. Since lenders are taking on more risk with smaller down payments, PMI gives them peace of mind that they’ll recoup losses if a borrower defaults.

While PMI makes homeownership possible without a hefty down payment, it does increase your monthly expenses until you build enough equity in your home.

How to Avoid Paying Private Mortgage Insurance?

Avoiding PMI doesn’t mean you have to save a full 20% down payment right away. Here are some strategies for How to Avoid Paying Private Mortgage Insurance or reduce the cost quickly:

1. Put Down 20% or More

The most straightforward way to avoid PMI is by making a down payment of 20% or more. If you can manage it, this upfront investment saves you the ongoing monthly PMI fee and may get you better interest rates as well

2. Consider a Piggyback Loan

Some buyers use an 80-10-10 loan structure, taking out a first mortgage for 80%, a second mortgage for 10%, and putting down 10% themselves. This combination helps avoid PMI because the primary loan stays at or below 80% loan-to-value (LTV)

3. Opt for Lender-Paid Mortgage Insurance (LPMI)

Instead of paying PMI monthly, some lenders offer an option where they cover the insurance in exchange for a slightly higher interest rate. This can reduce your monthly payment and eliminate the separate PMI fee

4. Shop Around for Lower PMI Rates

PMI rates vary widely among providers and lenders. Working with a mortgage professional to compare offers can help you find the most affordable PMI, saving you money until you can eliminate it

When and How Can You Remove PMI?

Knowing How to Avoid Paying Private Mortgage Insurance includes understanding how and when you can get rid of it once you’ve started paying.

Automatic Cancellation: PMI must be automatically canceled once your loan balance reaches 78% of the home’s original appraised value, assuming you’re current on payments

Request Cancellation: You can request PMI removal earlier, once your balance hits 80% LTV, by paying extra principal or a home appraisal reflecting increased property value

Refinancing: If your home has appreciated significantly or rates have dropped, refinancing may allow you to remove PMI sooner and lower your monthly payment

Why Avoiding PMI Matters

PMI doesn’t contribute to your equity; it’s pure insurance protecting the lender. That means every dollar spent on PMI is money that could otherwise go toward your home’s value or your savings. Learning How to Avoid Paying Private Mortgage Insurance can:

Lower your monthly mortgage payments

Save you thousands over the life of your loan

Help you build equity faster

Make your homeownership journey more affordable and less stressful

How to Avoid Paying Private Mortgage Insurance is a crucial question for homebuyers looking to maximize their investment and manage monthly costs. Whether you’re able to make a bigger down payment, use creative financing like piggyback loans, or shop smarter for lenders and PMI options, there are practical steps to reduce or eliminate this expense.

Understanding your loan options empowers you to make the best decisions for your financial future.

Call me, Hayden Madison, at 858-349-7538, or email me at hmadison@valorlending.com

VALOR LENDING GROUP OFFERS EVERY MORTGAGE LOAN IN THE BOOK!

At Valor Lending Group, I’m ready to help you achieve your investment goals.

Call me, Hayden Madison, directly at 858-349-7538, and turn your dreams into reality today!

Recently Funded | Valor Lending Group

And many more.

Every Project, Every Loan – Let’s Build Your Success Together!

Call me, Hayden Madison, today at 858-349-7538, or email me at hmadison@valorlending.com

Recap of Our Loan Products:

Private Money Loans (20% down / minimal documentation) typically, funds in 7-10 days
Stated Income Loans (Great for business owners and self-employed) No tax returns!
100% financing is available (we can cross-collateralize other properties if there is enough equity)
Valor VA Home Loan 100% financing up to $2.5MM
Investor Cash Flow Loan – No tax returns or DTI calculation! Based on the subject property’s cash flow
Flipper & Rehab Loans (Flip a property with one of our many options)
2nd Position Loans up to $5MM
Raw Land & Lot Loans
Ground-up Construction for spec homes, custom homes, and commercial ground-up.
Farms, Vineyards, Ranches, and Agricultural Properties (25-30% down)
10% down, Jumbo’s up to $1.5MM
Manufactured Housing / Mobile Homes (20% down / 600+ credit score)
Acreage Properties
Commercial Loans up to $500MM
3% & 5% down Conventional Loans– LPMI (Lender paid mortgage insurance)
Foreign Nationals Loans (no social security or residency required)

We Also Offer:

10, 15, 20, 25, 30 years Fixed, Conventional Conforming Loans
High Balance Conforming aka Super Conforming
Jumbo’s to $10 MM / 10% down Jumbo to $1.5MM
FHA, USDA
ARM’s
Reverse mortgages up to $1MM Value
Refinance including Cash Out

**Rates and terms are subject to change without notice