80/20 Mortgage vs. Private Mortgage Insurance

A so-called piggyback loan can let you get away without a PMI.

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Property Information
Home Value : ($)
Additional Information
Annual PMI :
Down Payment :
  Standard 80% Loan Second Loan
Interest Rate : (%) (%) (%)
Length : Yrs Yrs Yrs
Points : (%) (%) (%)
Closing Costs : ($) ($) ($)
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Financial Analysis (Switch to Plain English)
  Standard 80% Loan Second
Points Value : $2,700.00 $3,600.00 $300.00
Closing Costs : $1,200.00 $700.00 $1,000.00
Total Closing Costs : $3,900.00 $5,600.00
Down Payment : $30,000.00
Upfront Cost : $33,900.00 $35,600.00
Amount Financed : $270,000.00 $240,000.00 $30,000.00
Monthly PI : $1,449.42 $1,216.04 $253.16
Months With PMI : 78 0 0
Monthly PMI : $112.50 $0.00 $0.00
Monthly Payment : $1,561.92 $1,469.20
Total Interests Paid : $251,790.62 $213,344.38
Total PMI : $8,775.00 $0.00 $0.00
Total Payments : $530,559.60 $483,338.57
Plain English Help (Switch to Financial Analysis)

When taking out a mortgage, you might find it very useful to consider taking out an 80/15 loan in order to avoid PMI. It could potentially save you a great deal of money, even though the upfront costs may be a little bit higher.

Assume the property you are interested in has a value of $300,000.00 and you are prepared to spend $30,000.00 as a down payment. With a standard 30-year loan at 5.000% and 1.000 point(s), you will have to pay $33,900.00 upfront for the closing and $1,561.92 every month from the day on. In the end, you will have paid $530,559.60 for your home.

If you opt for an 80/15 loan, you can avoid making PMI payments altogether. It may, however, require higher upfront costs, as two loans are to be taken out. For this scenario, we are talking about $35,600.00.

Your monthly payments, however, will be slightly LOWER at $1,469.20.

At the end of the day, you will have paid only $483,338.57, i.e. you will SAVE $47,221.03 altogether!