I have less then 20% down payment. Can I avoid paying Private Mortgage Insurance (PMI)?
If your down payment is less than 20%, normally you will be required to pay PMI (Private Mortgage Insurance). Even if you do not have the 20% down payment, there are ways to avoid PMI. The most popular method is the piggyback loan program. In this method you will combine two loans. The first loan will cover 80% of the property value, and depending on the amount of your down payment the second loan could be 5%, 10%, 15%, or 20% of the value of the property. For example if you are planning to put 10% down, you come up with 10% percent of the down payment, and borrow another 10% as a 2nd mortgage. You will end up with 2 mortgages. The 1st mortgage is equal to 80% of the value of the sale price and the 2nd mortgage is for 10% of the value of the house. In addition to being tax deductible, the monthly payment of both mortgages combined will still be lower than if you had one mortgage and paid PMI.
