Mortgage insurance can add hundreds of dollars to a monthly payment, but it isn’t unavoidable. The loan structure you choose, the down payment you bring, and the programs you qualify for all determine whether you pay it at all. I’m Duane Buziak, NMLS #1110647, and I compare these structures across hundreds of wholesale lenders every week for Virginia and Mid-Atlantic borrowers, so this list reflects what actually gets PMI off the table versus what just delays it or trades it for a different cost.
1. Stack Down Payment Assistance to Cross the 80% LTV Line
Conventional loans require private mortgage insurance any time the first-mortgage loan-to-value ratio exceeds 80%, a threshold Fannie Mae’s mortgage insurance guidelines tie directly to loan-level risk pricing. Layering a down payment assistance second lien on top of your own savings can push the first mortgage down to that 80% mark, which removes the PMI requirement entirely rather than shrinking it.
Consider a $400,000 home where a borrower has saved 12% ($48,000). Financed alone, that leaves a first mortgage of $352,000, an 88% LTV that requires PMI. By pairing that savings with a Turbo DPA second lien covering the remaining 8% ($32,000), the first mortgage drops to $320,000, exactly 80% LTV, and PMI disappears from the first-mortgage payment. Running the numbers on a 30-year fixed rate: the 88% LTV scenario carries roughly $2,225 in principal and interest plus an illustrative PMI charge near $191 a month (using a common 0.65% annual PMI rate on the loan balance), plus property tax and insurance. Henrico County publishes its current real estate tax rate on its real estate tax page; at a rate near $0.85 per $100 of assessed value, a $400,000 assessment adds about $283 a month. Add roughly $150 for homeowners insurance and the 88% LTV scenario runs close to $2,849 a month. The 80/20 structure drops the first-mortgage payment to about $2,456 a month once PMI is removed, a difference of roughly $393 before accounting for the DPA second lien’s own terms, which vary by program and get confirmed during pre-approval.
- Get pre-qualified through a soft credit pull mortgage broker so you can test scenarios without a hard inquiry on your file.
- Confirm the DPA program’s income limits and property eligibility rules before you commit to a purchase contract.
- Have the broker structure the first mortgage at 80% LTV with the DPA covering the remainder, then request written confirmation of the resulting PMI status.
The common mistake is assuming any DPA amount automatically eliminates PMI. If the assistance only brings you to, say, 85% LTV, you’re still paying PMI, just on a smaller balance. Measure the resulting first-mortgage LTV percentage directly, and compare the blended payment (first mortgage plus any second-lien terms) against what you’d pay if the DPA fell short of 80%.
2. Use a VA Loan If You’re Eligible
VA-guaranteed loans carry no monthly mortgage insurance at any loan-to-value ratio, including 100% financing on a purchase. Instead, the VA’s funding fee schedule applies a one-time fee, financed into the loan or paid at closing, that varies based on down payment amount and whether it’s a borrower’s first or subsequent use of the benefit.
Suppose an eligible veteran finances a home with no down payment and no monthly PMI, paying the VA funding fee instead. That fee is meaningfully higher for a zero-down purchase than for one with even 5% or 10% down, so eligible borrowers who have some savings should still run both scenarios. Pairing the loan with Homes for Heroes savings on closing costs adds further value for veterans, active-duty service members, and eligible spouses.
- Confirm Certificate of Eligibility status; a broker can pull this electronically using your Social Security number and date of birth rather than requiring you to track down paperwork.
- Get a soft-pull pre-approval to compare VA pricing against conventional PMI options side by side.
- Ask the broker to itemize the funding fee based on your down payment and any prior VA loan use, since second-tier entitlement mechanics affect how much you can borrow with no down payment.
Second-tier, or bonus, entitlement matters if you already have an active VA loan: it’s calculated as 25% of the county loan limit, minus entitlement already in use, multiplied by four for the zero-down purchase limit. The common mistake is comparing only “no monthly PMI” against a conventional loan’s PMI-adjusted payment without factoring the financed funding fee into total loan cost. Measure the total financed amount including the funding fee against a conventional loan’s PMI-adjusted payment over your expected years in the home, not just the first monthly statement.
3. Explore a Physician or Doctor Loan Program
Physician and dental professional loan programs exist specifically because lenders view this borrower profile differently: high, stable future income against a thin current asset base, often with substantial student debt. These programs frequently allow financing above 90% LTV, sometimes to 100%, without a PMI line item, because underwriting relies on projected income and employment contracts rather than standard conventional debt-to-income treatment.
Picture a resident physician with a signed employment contract, strong income on paper, but limited savings after years of training. A standard conventional loan at that same LTV would require PMI; the physician program instead uses contract income underwriting and skips the PMI requirement, though it typically carries its own rate structure that reflects the added risk the lender is absorbing.
- Provide your employment contract and income documentation to a broker who underwrites physician loans regularly, since not every wholesale lender offers this program.
- Request a side-by-side quote comparing the physician loan against a conventional loan with PMI at the same down payment level.
- Confirm whether the program has restrictions on eligible degree types, specialties, or time since residency, since terms differ by lender.
The common mistake is choosing this program purely to dodge PMI without checking whether the rate premium erases the monthly savings. A physician loan’s slightly higher rate can, over a 30-year amortization, cost more in total interest than a conventional loan with PMI that eventually cancels. Measure the all-in monthly payment and total interest cost against a conventional PMI alternative over your expected time in the home, not just the presence or absence of a PMI line.
4. Structure an 80-10-10 Piggyback Loan
An 80-10-10 splits financing into an 80% first mortgage and a 10% second lien, most often a HELOC, so the primary note stays under the 80% PMI threshold even though you’re only putting 10% down. This works because PMI attaches to the first-lien LTV specifically; keeping that first loan at 80% satisfies the requirement regardless of what sits behind it.
For example, a borrower with 10% saved uses a HELOC as the second lien to bring the first mortgage to 80% LTV, avoiding PMI on the primary note entirely. The tradeoff is that the second lien carries its own rate, often variable, and its own repayment schedule that runs alongside the first mortgage.
- Qualify simultaneously for both liens through the same broker so underwriting on the two loans lines up.
- Compare the second lien’s rate and term against the PMI cost you’d otherwise pay on a single conventional loan at the same down payment.
- Confirm both loans are scheduled to close together, since a piggyback structure requires simultaneous funding.
The common mistake is evaluating this structure by looking only at the first mortgage’s payment, which looks attractively low without PMI, while ignoring the second lien’s separate and sometimes variable rate. A HELOC tied to prime can move considerably over a few years. Measure the combined monthly payment across both liens against a single conventional loan carrying PMI at the same 10% down payment, and revisit that comparison if the second lien’s rate is variable.
5. Consider Lender-Paid Mortgage Insurance (LPMI)
LPMI folds the cost of mortgage insurance into a somewhat higher interest rate instead of charging it as a separate monthly line item. The wholesale lender effectively prepays the insurance and recoups it through the rate over the life of the loan, which means the elevated rate is baked in permanently, unlike borrower-paid PMI, which cancels once you reach 78-80% LTV.
A borrower planning to stay in a home long-term generally does better with standard borrower-paid PMI, since it preserves the right to cancel once equity builds. A borrower who expects to refinance or sell within a few years, before PMI would naturally cancel anyway, often comes out ahead with LPMI’s lower visible monthly payment, since they’ll never reach the point where standard PMI would have dropped off regardless.
- Request a soft credit pull mortgage pre-approval with quotes for both LPMI and standard borrower-paid PMI structures on the same loan amount.
- Compare based on how long you realistically expect to hold the loan, not just the first year’s payment.
- Ask the broker for the breakeven month where standard PMI cancellation would overtake the LPMI rate savings.
The common mistake is choosing LPMI without realizing the higher rate is permanent and can’t be cancelled once your LTV reaches 78-80%, unlike the cancellation rights available under standard PMI. Measure the breakeven point in months where PMI cancellation would beat the LPMI rate premium, and weigh that against how confident you are in your holding-period timeline.
6. Pay a Single-Premium Mortgage Insurance Buyout at Closing
Instead of a recurring monthly charge, single-premium mortgage insurance lets you cover the entire PMI cost as one upfront payment at closing. This lowers your monthly payment immediately, since there’s no ongoing PMI line item, at the cost of tying up more cash at the time of purchase.
Suppose a borrower has extra reserves beyond what’s needed for the down payment and closing costs. Paying the insurance premium upfront reduces the monthly payment below what borrower-paid monthly PMI would require, which can matter for debt-to-income qualification on a tight budget as much as for long-term savings.
- Get a no credit hit mortgage application quote comparing the single-premium cost against the total monthly PMI you’d pay over your expected years in the loan.
- Confirm you’ll have enough closing funds left over after the upfront premium to cover reserves lenders typically require.
- Ask whether the premium is refundable in any part if you refinance or sell shortly after closing.
The common mistake is paying the upfront premium without confirming you’ll hold the loan long enough to recoup the cost through lower monthly payments. If you sell or refinance within a couple of years, you may have paid more than you would have under standard monthly PMI. Measure the number of months required to break even on the upfront premium against continuing monthly PMI payments instead.
7. Check USDA Eligibility for an Alternative Guarantee Fee Structure
USDA loans replace conventional PMI with an upfront guarantee fee and a smaller annual fee, both set by USDA Rural Development rather than by loan-level LTV pricing. These loans are available in eligible rural and many suburban areas, and they typically allow zero down payment.
Imagine a buyer purchasing in a USDA-eligible suburban area outside a metro core. They finance with no down payment and pay USDA’s guarantee fee structure instead of conventional PMI, which for many borrowers works out cheaper than PMI on an equivalent zero-down conventional loan, since conventional PMI at very high LTVs tends to be priced steeply.
- Verify the property address against the current USDA Rural Development eligibility map, since boundaries shift periodically and a property that qualified a few years ago may not today.
- Confirm household income against the county-specific income limits published for the USDA program, since these are household limits, not just borrower income.
- Compare the total guarantee fee cost against conventional PMI at the same loan amount before choosing a program.
The common mistake is assuming a property is USDA-eligible because it sits in a rural-sounding zip code, without checking the current official map. Eligibility is drawn by USDA boundaries, not general impressions of an area’s character. Measure the total guarantee fee cost, upfront plus annual, against conventional PMI cost at the same loan amount to see which structure actually costs less over your expected holding period.
8. Request Early PMI Cancellation If You’re Already Paying It
If you’re already in a conventional loan with PMI, federal law gives you cancellation rights well before the loan naturally amortizes it away. Under the Homeowners Protection Act, as outlined by the CFPB, borrower-requested cancellation is available once your loan balance reaches 80% of the original property value, and automatic termination occurs at 78%, both based on the original amortization schedule unless you request cancellation earlier based on current value.
Consider a homeowner whose property value rose faster than their loan amortized down. Rather than waiting years for automatic termination at 78%, they order a new appraisal, document that their loan balance now represents 80% or less of current value, and submit a cancellation request years ahead of schedule.
- Review your payment history to confirm you’re current, since servicers require a good payment record to approve early cancellation.
- Confirm no additional liens have been added to the property since origination, which can disqualify a request.
- Order a current appraisal to establish today’s value rather than relying on the original purchase price.
- Submit a written cancellation request to your servicer citing the Homeowners Protection Act provisions and the updated appraised value.
The common mistake is waiting passively for automatic termination at 78% instead of proactively requesting cancellation once equity hits 80%, especially in a market where values have appreciated. Measure your current LTV based on updated appraised value against the original purchase price, and calculate the monthly savings you’d capture the moment PMI is removed.
How the Structures Compare Side by Side
Each path above trades PMI for a different cost structure or eligibility requirement. Here’s how the major options stack up on the factors that matter most when comparing them:
- Conventional with PMI (below 20% down): Standard rates, monthly PMI charge that varies by credit score and LTV, cancellable at 80% LTV under federal law, available to any qualified borrower nationwide.
- Conventional with DPA stacking to 80% LTV: Standard first-mortgage rate, no PMI once the 80% threshold is met, requires a compatible second-lien program and income/property eligibility.
- VA loan: No monthly mortgage insurance at any LTV up to 100%, one-time funding fee that varies with down payment and prior use, available only to eligible veterans, active-duty members, and surviving spouses.
- USDA loan: No monthly PMI, upfront and annual guarantee fee instead, zero down payment common, restricted to USDA-eligible properties and household income limits.
- Physician/doctor loan: No PMI at high LTV, rate premium instead of a PMI charge, restricted to eligible medical/dental professionals and specific employment documentation.
- 80-10-10 piggyback: No PMI on the first mortgage, second-lien rate and term run in parallel, requires qualifying for two loans at once.
- LPMI: No separate monthly PMI charge, permanently higher rate instead, best suited to shorter expected holding periods.
A fully worked dollar example: on a $400,000 home with a $352,000 loan (88% LTV), principal and interest at a 30-year fixed rate run roughly $2,225 a month, illustrative PMI near $191 a month, property tax around $283 a month (based on Henrico County’s published real estate tax rate, verify the current figure on the county’s tax page), and homeowners insurance near $150 a month, for a total near $2,849. Restructure the same purchase to 80% LTV using a DPA second lien and the first-mortgage payment drops to roughly $2,456 a month once PMI is removed, a difference worth running through a soft-pull comparison before you lock a rate.
Mortgage Insurance Avoidance: Common Questions
Is it possible to avoid mortgage insurance without 20% down?
Yes. VA loans, USDA loans, DPA-stacked conventional loans, and 80-10-10 piggyback structures can all avoid PMI with less than 20% down, though each replaces it with a different cost or eligibility requirement.
What’s the difference between PMI and LPMI?
PMI is a separate monthly charge added to your payment that cancels once you reach 78-80% LTV; LPMI folds that cost into a permanently higher interest rate with no separate charge and no cancellation option.
Do VA loans really have no mortgage insurance?
Correct, VA loans carry no monthly mortgage insurance at any LTV, but they do have a one-time funding fee, financed into the loan or paid at closing, based on down payment and prior VA loan use.
Can I remove PMI before my loan reaches 78% LTV automatically?
Yes, under the Homeowners Protection Act you can request cancellation once your loan balance reaches 80% of original value, and you can use a current appraisal to prove you’ve reached that threshold ahead of schedule if your home has appreciated.
Does a physician loan always avoid PMI?
Most physician loan programs skip PMI even at high LTV, but they typically carry their own rate structure, so the total cost should be compared against a conventional PMI loan rather than assumed to be cheaper.
How does an 80-10-10 piggyback loan avoid PMI?
PMI attaches to the first-lien LTV; splitting financing into an 80% first mortgage and a 10% second lien keeps the primary loan at exactly the threshold where PMI isn’t required, even with only 10% down.
What is USDA’s guarantee fee and how does it compare to PMI?
USDA loans charge an upfront guarantee fee plus a smaller annual fee instead of PMI; for many eligible zero-down borrowers this totals less than conventional PMI at an equivalent high LTV, though eligibility depends on property location and household income.
Can down payment assistance really eliminate PMI entirely?
It can, but only if the combined savings and assistance bring the first-mortgage LTV to 80% or below; assistance that falls short of that threshold reduces your out-of-pocket cost but doesn’t remove PMI.
Is single-premium mortgage insurance better than monthly PMI?
It depends on how long you’ll hold the loan; paying the premium upfront lowers your monthly payment immediately, but you need enough time in the home to recoup that upfront cost through the payment savings.
Will checking these options affect my credit score?
Not if you use a soft credit pull mortgage broker for initial comparisons; a soft-pull pre-approval lets you compare VA, USDA, conventional, and piggyback structures without a hard inquiry hitting your credit file.
Where to Start Comparing Your Options
If you qualify for either down payment assistance stacking or a VA loan, start there. Both eliminate mortgage insurance outright rather than trading it for a different cost, which puts you ahead of every other structure on this list before you even factor in rate. From there, a soft-pull pre-approval lets you line up the remaining options, LPMI, single-premium buyouts, USDA, physician loan programs, side by side against your actual numbers, not general assumptions about what “should” be cheaper. Don’t guess your rate. Shop it, and let the comparison across hundreds of wholesale lenders do the work of finding which structure actually saves you money over the years you plan to stay in the home.
Your dream home is within reach, and how much you could save depends on comparing these structures against your specific numbers rather than assuming 20% down is the only path to skip PMI. Securely pre-qualify in minutes with no impact to your credit score and compare competitive offers from trusted lenders who are ready to help you save.