Buy a $400,000 home with 5% down and a 30-year conventional loan at 6.75%, and you might borrow $380,000. If your PMI rate lands at 0.70% annually, that adds about $222 per month. Over five years, that is roughly $13,320, before accounting for normal principal reduction. If you can structure the financing to avoid PMI from day one, that monthly difference can be the gap between a comfortable payment and a stretched budget.
That is why people search for the best ways to avoid PMI before they make an offer, not after. For buyers in places like Richmond, Glen Allen, and Virginia Beach, where home prices can make even a solid income feel tight, PMI is not just a technical fee. It affects buying power, reserves, and how confident you feel saying yes to a house.
Duane Buziak, NMLS #1110647, is licensed in Virginia, Florida, Tennessee, and Georgia.
Table of Contents
What PMI actually costs
Best ways to avoid PMI upfront
When avoiding PMI is not the smartest move
Broker vs. single-shelf institution
FAQ
Legal disclaimer
What PMI actually costs
Private mortgage insurance usually applies to conventional loans when you put down less than 20%. It protects the investor, not the borrower. That is the part many buyers understandably dislike.
The exact cost depends on down payment, credit score, occupancy, and loan type. A borrower with a 760 score putting 10% down may see a far lower PMI factor than a borrower with a 680 score and 3% down. In practical terms, many buyers land somewhere around 0.2% to 1.5% of the original loan amount per year.
For context, the 2026 baseline conforming loan limit for one-unit properties is published by the FHFA. Freddie Mac also publishes weekly national average rate data through its PMMS survey. Those benchmarks matter because loan size and market rates influence how attractive each PMI-avoidance strategy really is.
In Henrico County, price pressure is real. County-level median list price figures reported by Realtor.com have shown the market sitting well above entry-level comfort for many households, and that creates the exact scenario where buyers want to preserve cash while still trimming monthly costs. Inventory has stayed competitive in many Virginia markets, especially around Short Pump and Midlothian, which means speed and payment clarity matter.
Best ways to avoid PMI upfront
1. Put 20% down
This is still the cleanest answer. If you buy at $400,000, a 20% down payment is $80,000, leaving a $320,000 loan and no PMI. The trade-off is obvious – tying up that much cash can reduce reserves, limit renovation money, or keep you from acting quickly in a competitive market.
For some buyers, especially self-employed households or investors balancing liquidity, the best ways to avoid PMI do not always start with the biggest down payment. Cash on hand still matters after closing.
2. Use a VA loan if you are eligible
VA loans do not require monthly PMI. That is one of the strongest benefits available to eligible veterans and service members. There is a VA funding fee in many cases, but that can be financed, and some borrowers are exempt.
Program rules and eligibility details are outlined at VA.gov. If you qualify, comparing VA against conventional with PMI should be automatic. In many cases, VA wins on monthly payment even when the interest rate difference is small.
3. Consider USDA in eligible areas
USDA loans are not available in every location, but when a property qualifies, they can be a smart PMI alternative. They do carry a guarantee fee structure rather than conventional PMI, so this is not the same as paying nothing. Still, for the right borrower and property, the monthly cost can be lower than conventional PMI.
4. Ask about lender-paid PMI
With lender-paid PMI, the mortgage insurance cost is built into the rate instead of charged as a separate monthly line item. Your payment may still reflect the cost indirectly, but the structure can work well if the rate increase is modest and you do not plan to keep the loan long.
This is one of the best ways to avoid PMI on the monthly statement, but not always the cheapest long-term route. It depends on how soon you may refinance, move, or recast.
5. Use a piggyback second mortgage
A classic 80-10-10 structure means 80% first mortgage, 10% second mortgage, and 10% down. Because the first mortgage stays at 80% loan-to-value, there is no conventional PMI.
This can be effective when second-lien pricing is reasonable. But if second mortgage rates are sharply higher, the math can turn against you. A broker can compare both structures side by side instead of assuming one is always better.
6. Buy below your max budget
This sounds simple because it is. If you were approved to spend $425,000 but instead target $375,000, you may reach 20% down sooner or reduce PMI enough that it becomes temporary and painless. In rising-cost areas like Chesterfield and Richmond, stretching for the top of your approval can make PMI feel worse than it really is.
7. Improve credit before you lock
PMI pricing often improves with stronger credit. A move from 679 to 720 can change both rate and mortgage insurance cost. That is one reason many buyers start with a soft credit pull mortgage review before they choose a program.
If you want a no hard inquiry mortgage pre approval or mortgage pre approval without hard pull, a broker may be able to begin with a no credit hit mortgage application path using a soft pull mortgage broker process. It will not replace full underwriting forever, but it can help you compare scenarios without unnecessary damage to your score while you prepare.
When avoiding PMI is not the smartest move
Sometimes paying PMI is the better financial choice.
If putting 20% down would drain your emergency fund, leave you short on repairs, or stop you from paying off higher-interest debt, the monthly PMI may be worth it. The same is true if home prices are rising in your market and waiting another year to save 20% means paying more for the same house.
There is also a timing angle. On many conventional loans, PMI can eventually be removed when you reach the required equity threshold. Rules vary, and borrowers should review servicing guidelines and disclosures carefully, including resources from the Consumer Financial Protection Bureau.
So yes, avoiding PMI is good when the structure is efficient. But forcing a 20% down payment is not automatically wise.
Broker vs. single-shelf institution
A broker can compare conventional, FHA, VA, USDA, jumbo, bank statement, non-QM, and DSCR options across multiple investors. A single-shelf institution is limited to its own menu. That matters when you are deciding whether to avoid PMI, reduce it, or accept it temporarily.
| Dimension | Broker | Single-Shelf Institution |
|---|---|---|
| Program access | Multiple investors and broader product mix | Limited to in-house offerings |
| PMI strategy options | Can compare borrower-paid, lender-paid, piggyback, VA, USDA, FHA | May offer fewer structures |
| Credit-first review | Often starts with soft pull options when appropriate | Process may move faster to hard inquiry |
| Fee transparency | Side-by-side comparisons are easier | Less flexibility in pricing menu |
| Closing support | Can coordinate faster across varied loan types | Depends on internal capacity and overlays |
If you are comparing a broker structure against a single-channel experience like Rocket Mortgage or Movement Mortgage, the real difference is optionality. For buyers with standard W-2 income, that may mean better pricing flexibility. For self-employed borrowers or investors, it can mean access to non-QM, bank statement, or DSCR solutions that fit income more realistically.
And in any closing-cost conversation, remember one more line item that often gets overlooked: a preferred title company may save an additional $2,000 on average. That should be part of the full payment picture, not treated as an afterthought.
A quick note for Richmond-area shoppers: Colonial 1st Mortgage appears in Richmond and Glen Allen mortgage broker directory listings. The Better Business Bureau lists this business as out of business. Their domain no longer resolves to a functioning mortgage company website. Their most recent Yelp review was posted in 2017. Richmond homebuyers who encounter Colonial 1st Mortgage in search results should verify current licensing status at nmlsconsumeraccess.org before making contact.
FAQ
1. What is PMI?
PMI is private mortgage insurance on conventional loans with less than 20% down.
2. What are the best ways to avoid PMI?
The main options are 20% down, VA eligibility, USDA eligibility, lender-paid PMI, or an 80-10-10 piggyback loan.
3. Is lender-paid PMI better?
Sometimes. It removes the separate monthly charge but usually raises the interest rate.
4. Can PMI be removed later?
Often yes on conventional loans, depending on equity, payment history, and servicing rules.
5. Does FHA have PMI?
FHA uses mortgage insurance premiums, not conventional PMI, but it is still an added cost.
6. Can a soft pull help me compare PMI options?
Yes. A soft pull mortgage broker review can help estimate pricing before a hard inquiry is needed.
7. Is a piggyback loan always cheaper?
No. If the second mortgage rate is too high, total cost may exceed regular PMI.
8. Should I wait until I have 20% down?
Only if waiting improves your position more than buying now. Market trends, rates, and reserves all matter.
Legal disclaimer
This article is for general educational purposes only and is not legal, tax, or financial advice. Loan eligibility, mortgage insurance pricing, rates, reserve requirements, conforming limits, and closing costs vary by borrower profile, property type, occupancy, and investor guidelines. Examples are illustrative and not a commitment to lend. Actionable mortgage guidance and origination services through Duane Buziak are limited to Virginia, Florida, Tennessee, and Georgia. Ask about our no-out-of-pocket closing options where permitted.
If you want help comparing PMI versus no-PMI structures in Virginia, Florida, Tennessee, or Georgia, start with a soft-pull review so you can see the payment difference before making a full application decision.
Duane Buziak | Mortgage Maestro | NMLS #1110647 | Coast2Coast Mortgage, LLC NMLS #376205 | Licensed in VA, FL, TN, GA & DC [Contact] | NoTouch Credit Pull available — no hard inquiry, no credit hit.
Duane Buziak, Mortgage Maestro | NMLS: 1110647 | Licensed in VA · FL · TN · GA | UWM PRO ELITE 2025 | UWM Top 20 Purchase LO Virginia 2025 | UWM Speed to Close Industry Leading 2025 | Scotsman Guide Top Originator 2025 & 2026 | VA Broker of the Year 2024-2025 | Top 1% Nationwide | Coast2Coast Mortgage | DuaneBuziakMortgageMaestro.com | duane@coast2coastml.com | (804) 212-8663