0% down higher interest vs 5% down + PMI lower interest

[Olga B.]

Hi everyone!

I am currently purchasing a single family home to occupy and eventually rent out. 

The main reason behind purchasing a single family was the ability to get a first time home-buyer loan for 30 years fixed.

The bank I am working with offers 0% down with no PMI but a 4.875% interest rate.

Another option I am entertaining is going with a conventional 4% rate with 5% down and PMI. (The funds are available for 5% down)

1st option end up with high monthly payments but more cash left in my pocket. 

2nd option leaves me with a lower monthly payment but less cash in my pocket. The difference between the two is about $40 a month. (5% down being the lower payment)

The trouble I am having is which one would benefit me more as a rental when I decide to move on (and potentially invest into more RE). 

Thought I would reach out to the wise folks down at bigger pockets and pick your brains!

Thanks!

[Greg Downey]

@Olga B. That depends on your timeline.  If you plan on moving on to something else rather soon, then money in your pocket today is good.  If you are going to wait, then money in your pocket today is less important.  I would look at an amoratization table and figure out where your "break even" point is.  That should give you a good picture of you timeline, and should help you decide.