PMI... Is it possible to avoid it?

[Sean Ridlon]

Hello all,

I had a question about PMI. Is it possible to buy a property using a conventional mortgage without 20% IF the subject property is being purchased for 75% or less of the appraised value?

TIA!

[Kyle J.]

Lenders used the lower of the appraised value or the purchase price to determine LTV. So if the home was worth (and appraised for) $200k but you were purchasing it for only $100k, they would use $100k to determine the LTV. That means you would need to put down $20k to avoid PMI.

They used to do "piggyback" loans (80-10-10) where you'd take a first loan for the 80% and a second for 10% and then put down 10% and avoid PMI, but not sure if they still do those. You can ask your lender if that's an option though.