Is Mortgage Insurance a deal killer, or the norm?

[John M.]

I'm working with my mortgage broker on financing for my first rental property. I'm looking to get a 2-4 unit, and I will be an owner occupant in one of the units.

We got into the discussion about what I'd be able to afford to put down, and how I should not put myself in a position where I would be " house rich and cash poor". While I agree with this, I'm intimidated by the 1% PMI for the life of the loan.

So my questions are:

1. Is it normal as a residential multi family investor to put 3.5-5% down and still make a good deal out of it, even with PMI? This makes for a weaker investment, but allows for a larger portfolio, I'd assume.

2. When I hear discussions about 50% & 2% rules, are these assuming 20% down and no PMI?

3. I've heard Piggyback loans mentioned where you finance 80% with the bank via your home mortgage, 10% via a private loan, and bring 10% cash + closing costs to the table. This would eliminate PMI, but I'd be stuck with the higher interest rate on the 10% private loan.