Private Mortgage Insurance (PMI) protects lenders rather than homeowners, typically required for conventional loans with down payments less than 20%. While PMI increases monthly costs, it makes homeownership more accessible. To avoid PMI, making a down payment of 20% or more is recommended, directly reducing lender risk. For those unable to save that much, budgeting, cutting expenses, utilizing tax refunds, seeking gifts, and exploring down payment assistance programs can help boost savings for a larger down payment.
Private Mortgage Insurance (PMI) protects lenders if borrowers stop making mortgage payments and is typically required when down payments are less than 20%.
Making a 20% down payment or more is the most straightforward way to avoid PMI, as it reduces lender risk with more homeowner equity.
To save for a larger down payment, individuals should budget, cut expenses, and utilize tax refunds, along with potential gifts from family.
Down payment assistance programs are available for first-time homebuyers or those within specific income brackets and can provide grants or low-interest loans.
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