Loan To Cost vs Loan To Value & PMI

[Matthew O'Dell]

I am in the process of purchasing my first investment property. While talking to my lender I am trying to understand the difference of the LTC vs. LTV in regards to my down-payment and PMI.

I am told that my down-payment need to be a percentage of the purchase price not of the value of the home to avoid PMI. I feel like I understand with a refinance why having 20% LTV will eliminate PMI but why doesn't LTV matter in the initial purchase?

I feel that if I pay 295 for the home and the appraisal comes back at 330 that putting 31k should eliminate the PMI. That would leave the loan at 80% LTV. Instead, I have to put 59k on a 295 purchase no matter the appraised value.

What am I missing? Is that right or should I look at a different lender?