Better off putting 20% down or paying for PMI?

[Joe Vastola]

I am looking to buy a SFH and am wondering if it is smarter to just put down 20% or put less down and take on the expense of private mortgage insurance. I'm assuming the cost of PMI is based on the size of the loan and other financials such as credit score and income that demonstrate the buyers ability to pay back the loan? Is one option recommended more than the other?

[Alexander Felice]

What I did on my current house is take the PMI on a house I knew would rapidly appreciate and then refi when I'm at 80% compared to the new value.

I've also bought a significantly undervalued foreclosure that I moved into so I got to use 3.5% FHA, then a year later I pulled a ton of cash out and dropped PMI.

It really depends on how much the PMI costs vs how soon you'll be able to refi based on the specific house AND it depends on what the opportunity cost of the money you would put down is.