Can I buy a house with 5% or 10% down and avoid monthly mortgage insurance?

What’s the sweet spot for your down payment to get the best home loan and avoid monthly mortgage insurance?  It doesn’t matter how much money you have saved for a down payment, it’s not always best to put 20% or more down.  Sure, you don’t want to spend any extra on monthly mortgage insurance, but did you know you can buy a house with 5% or 10% down and still avoid the costly monthly PMI.

Buy a house with 5 percent or 10 percent down payment and Avoid Monthly Mortgage Insurance

There are many ways you can buy a home with less than 20% down and even avoid paying the dreaded monthly PMI. Questions about how to avoid monthly mortgage insurance? PMI or private mortgage insurance is available in other forms that can make your monthly house payment much more affordable and in some cases isn’t required at all:

  • Upfront mortgage insurance (Single Premium) – The upfront MI is a lump sum that can either be paid at closing, paid by the seller, or even financed into the home loan!
  • Lender paid mortgage insurance (LPMI) – No monthly MI and also no upfront MI, which can save you thousands of dollars over the life of the loan.  While at a slightly higher interest rate, the LPMI option can help you start saving money as soon you buy.
  • Combo Loan (first and second) – Avoid mortgage insurance all together by going with a combo loan, typically seen as a 80-10-10 or 80-15-5 home loan.  The ’80’ is the percentage of the first loan, the ’10’ or ’15’ is the second loan, and the final ’10’ or ‘5’ is the down payment.  Is an 80-10-10 or 80-15-5 the best home loan for you?

The fact of the matter is, there are many ways you can structure your home financing with less than 20% down payment.  For many people a standard monthly mortgage insurance is their best option, but how do you know until you’ve had a chance to see a detailed side-by-side comparison of all your loan options .

Flexible Down Payment with Flexible Options to Create a Tailor-Made Home Loan

No matter how much you have available for a down payment, it may not be your best option to put all of your money down.  Now that you know you can avoid monthly mortgage insurance, consider the many other opportunities that may present themselves in the years to come and how much money you may be able to save.  Will you need access to that ‘cash’ that you used for down payment?  If the answer is possibly yes, then don’t find yourself house poor.  Find out which loan options are available and the best fit for you and your future goals.

If you’d like to see a detailed loan comparison based on your unique situation, complete our brief online loan questionnaire or call us today — 972-499-0454.  We can help!

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+Patrick Glaros empowers people to find their best home loan option. Through planning and education, and a goal-oriented approach, Patrick and the team at Dallas Mortgage Planners have one common goal: Help clients make an informed decision to choose the best home loan for their unique situation. Find other articles written by Patrick.

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