I don't want to pay mortgage insurance
Mortgage insurance when shopping for a home loan. Learn how to compare PMI costs and alternatives across lenders.
What You'll Learn in This Chapter
- Why lenders frame PMI as inevitable without discussing alternatives like lender-paid PMI or piggyback loans
- How to compare PMI costs across lenders, which can vary significantly
- Scripts to explore PMI alternatives and ensure you are getting competitive PMI rates
You tell a lender you don't want to pay mortgage insurance. The lender responds: "If you don't have 20% down, mortgage insurance is required by the lender to protect their investment. It's not really optional—it's a requirement for loans with less than 20% down."
But, here's what's really happening...
PMI Inevitability Framing is a tactic where lenders present mortgage insurance as a binary requirement without discussing alternatives or cost variations. The loan officer's process is to frame PMI as "required if you have less than 20% down"—which is technically true—while omitting that PMI COSTS vary significantly across lenders, and alternatives like lender-paid PMI or piggyback loans may be more cost-effective.
As a shopper, your counter-process is to recognize that while PMI may be required for loans under 20% down, the COST of PMI is competitive and varies by lender. PMI rates range from 0.3% to 1.5% of the loan amount annually depending on credit score, down payment, and lender pricing. When lenders frame PMI as simply "required," they're avoiding the competitive question: Is their PMI rate competitive? Are there alternatives like lender-paid PMI that might save money? PMI may be required—but that doesn't mean you should accept the first PMI rate you're quoted.
Now that you understand the tactic, let's look at how most people fall into the trap.
➡ How People Get Trapped
Most people respond with:
Okay, I understand. PMI is required if I don't have 20% down. Let's move forward.
Don't do that.
When you accept PMI as inevitable without comparing PMI COSTS across lenders, you've given up significant money. PMI may be required for your down payment level, but the RATE you pay for PMI is competitive and varies widely. A borrower with 10% down and a 750 credit score might pay 0.5% PMI at one lender and 1.0% PMI at another—a difference of $1,000+ annually on a $400K loan. By treating PMI as simply "required," you'll never know if you're paying a competitive PMI rate.
PMI may be required, but PMI costs are competitive.
➡ What You Should Say Instead
I understand PMI may be required for my down payment level. Can you provide me with a written Loan Estimate showing the exact PMI cost, and are there alternatives like lender-paid PMI that might be more cost-effective? I'd like to compare PMI costs across multiple lenders.
Here's why this is the right approach:
- Acknowledges PMI requirement without accepting non-competitive PMI rates
- Asks about alternatives like lender-paid PMI (higher rate, no monthly PMI)
- Requests written documentation for PMI cost comparison
- Recognizes that PMI costs vary significantly across lenders
The script treats PMI as a required but competitive cost that should be compared across lenders, not accepted without question.
➡ See The Mortgage Script in Action
➡ Key Takeaway
PMI may be required if you have less than 20% down, but PMI rates are competitive and vary across lenders. Compare written PMI costs across multiple lenders and ask about alternatives like lender-paid PMI to ensure you're getting the best deal.
Related Mortgage Resources
Mortgage Calculator
See how PMI affects your monthly payment and total cost over time.
Add An Extra Lender
Get a Loan Estimate today showing PMI costs and alternative loan options.
Home Affordability Calculator
Calculate how much house you can afford with and without PMI.
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