If you have less than 20% down, you have to pay PMI.
There are 2 ways to avoid PMI. One is to do what we called tandem financing or a “piggyback loan.” The first bigger loan is 80% of the price of the home, as if you have 20% down. Then we give you a second mortgage from a different bank for 10% of the price. So 80 + 10% means you put 10% down. That way there is no PMI, and it is all interest tax write-off (the PMI is usually not a write off).
The best part is that once you pay off the second mortgage, the payment goes down because all you have left to pay is the first mortgage. It’s like borrowing the down payment and getting the house now, instead of having to wait to save up that extra $30,000 to $60,000. The 2nd way we avoid PMI is wrapping it into the rate. Instead of getting a 3.5% mortgage rate you would get a 3.75% rate and no PMI. The downside to this is that you can never get rid of PMI because it’s permanently in the interest rate.