PMI vs Larger Down Payment
Putting **less than 20% down** often requires **PMI** until you reach ~78–80% LTV. Waiting for a **larger down payment** cuts PMI and monthly principal but delays homeownership and market exposure.
Step by step
1. Quote PMI monthly
Typically 0.2–2% of loan amount annually—verify with lender.
2. Compare rent while saving
Rising prices can outpace PMI savings from waiting.
3. Plan cancellation
Automatic termination rules vs lump-sum principal to drop PMI.
PMI vs 20% down
Low down + PMI can win in rising markets; 20% down wins on steady monthly cost.
- Low down + PMI: Buy sooner; extra monthly until LTV threshold.
- 20% down: No PMI; lower payment; more cash tied up at closing.
Use our calculators
Common mistakes
- Ignoring FHA lifetime MIP rules
- Not requesting PMI removal when eligible
FAQ
Is PMI permanent?
Usually cancellable once LTV requirements are met—confirm loan type (FHA MIP differs).