Owning a home comes with many responsibilities outside the initial cost of the property. For many, after purchasing a
home, they’re surprised with having to pay for private mortgage insurance on top of their monthly mortgage
payments. 

Additional bills are never fun but luckily, there are ways to avoid paying for private mortgage insurance. 

What is private mortgage insurance? 

In addition to homeowners insurance which offers financial protection to the property, your mortgage lender may also
require you to pay for private mortgage insurance (PMI). This requirement usually comes into play if your down
payment is below 20 percent of the total price of the home. 

PMI is designed to protect mortgage lenders in the case the loan borrower can’t make payments on the loan. 

Avoid PMI by increasing your down payment amount 

Making a down payment of at least 20 percent or more of the home value allows you to avoid PMI payment requirements.
However, 20 percent of the home value may not be feasible at the time of purchase. 

If you’re unable to make a 20 percent down payment, consider utilizing the piggyback mortgage method, also known as
the 80-10-10 mortgage. With this model, your primary mortgage would provide 80 percent of the home cost, 10 percent
would come from a smaller mortgage loan and the final 10 percent would come out of pocket. 

Another alternative would be to search for a lender who offers lender paid private mortgage insurance (LPMI). The
lender would cover the cost of the mortgage insurance but in exchange you’d pay a higher interest rate on your
mortgage loan. 

Paying for private mortgage insurance can be a pain, especially because it only protects the loan lender. Consider
the options above if you’re interested in bypassing PMI payments.