Do You Really Need 20% Down to Buy a Home?

Understanding private mortgage insurance and what it means for homebuyers in Snohomish County.

One of the conversations I have with buyers is about the down payment.

How much do you really need? Is 20% still the standard? And what happens if you've found a home you love but would prefer to keep some of your savings available?

These are important questions, especially when you're making decisions about one of the largest investments of your life.

The good news? You may be able to purchase a home with less than 20% down.

That's where private mortgage insurance, commonly called PMI, comes into the conversation.

Let's talk about what it means, how it works, and why understanding your options can help you make a thoughtful decision about your next home.

First, What Exactly Is PMI?

Private mortgage insurance is a type of insurance that lenders commonly require when a buyer purchases a home using a conventional mortgage with less than 20% down.

PMI protects the lender if the borrower stops making mortgage payments. It doesn't provide payment protection for the homeowner.

For buyers, it represents an additional cost to consider when calculating their monthly housing expenses.

It can also make purchasing a home possible with a smaller down payment.

And depending on your financial goals, that may be an option worth exploring.

What Does PMI Actually Cost?

The cost of PMI varies from buyer to buyer.

Your lender will consider factors such as your credit profile, loan amount, down payment, and the type of mortgage you're choosing.

Let's imagine you're purchasing a $700,000 home in Lake Stevens.

A 20% down payment would be $140,000.

A 10% down payment would be $70,000.

That's a significant difference in the amount of cash needed upfront.

With the smaller down payment, you may have a PMI expense added to your mortgage payment.

The question becomes how those numbers fit into your overall financial picture.

I always encourage buyers to look beyond the purchase price and understand what homeownership will look like month to month.

Your lender can help you compare actual loan estimates and determine which options align with your budget.

How Is PMI Paid?

There are a few ways private mortgage insurance may be structured, depending on your lender and loan program.

Monthly PMI

The most common arrangement. Your insurance premium is included in your monthly mortgage payment.

Upfront PMI

Some loans allow you to pay the premium at closing. Depending on the terms, this may reduce or eliminate an ongoing monthly PMI charge.

A Combination

Certain programs allow part of the premium to be paid upfront, with the remaining amount included in your monthly payments.

Each option comes with different financial considerations.

Before choosing, ask your lender to explain the total cost, how long you may be paying, and what happens if you refinance or sell the home.

Do You Have to Pay PMI Forever?

Here's something many buyers are happy to learn.

On many conventional loans, PMI can eventually be removed.

For eligible loans, federal rules generally allow homeowners to request cancellation when their principal balance reaches 80% of the property's original value, provided certain requirements are met.

PMI is generally scheduled to terminate automatically when the loan balance reaches 78% of the original value according to the applicable amortization schedule, as long as the borrower is current on payments.

Some homeowners may also qualify for earlier removal under their loan servicer's or loan investor's guidelines.

The specific rules depend on your mortgage.

For that reason, I recommend asking your lender about PMI cancellation before you finalize your financing.

Knowing what to expect today can help you plan for the years ahead.

Is It Better to Wait Until You Have 20% Saved?

This is where I believe the conversation becomes especially personal.

Every buyer has a different financial picture, timeline, and vision for the future.

Some prefer to save for a larger down payment. Others may be comfortable purchasing sooner while keeping additional funds available for renovations, furnishings, emergencies, or other priorities.

Both approaches deserve thoughtful consideration.

If you're considering a home in Snohomish, Monroe, Lake Stevens, or the surrounding communities, understanding the full cost of ownership is an important part of preparing for your purchase.

A good lender can help you compare down payment options, monthly payments, interest rates, and mortgage insurance costs.

My role is to help you navigate the real estate side of those decisions, understand the local market, and develop a buying strategy that reflects your goals.

A Few Questions Worth Asking Your Lender

Before committing to a mortgage, I encourage buyers to ask:

• What would my monthly payment look like with 5%, 10%, 15%, or 20% down?
• How much would PMI add to my monthly expenses?
• Are there different loan programs I should consider?
• When could I become eligible to remove PMI?
• How much cash should I plan to have available after closing?

Having these conversations early can make the home search feel much more manageable.

Frequently Asked Questions

Can I buy a home without putting 20% down?

Yes. Many conventional mortgage programs allow qualified buyers to purchase with less than 20% down. Some offer down payments as low as 3%, depending on eligibility.

Does PMI protect me if I can't make my mortgage payment?

No. PMI protects the lender against certain losses if a borrower defaults. It does not prevent foreclosure or cover your payments.

Is PMI required on every mortgage?

No. PMI is commonly associated with conventional loans with smaller down payments. FHA loans have their own mortgage insurance requirements, while other loan programs have different rules and costs.

Can PMI be removed if my home increases in value?

Potentially. Some loan servicers and investors allow cancellation based on the home's current value, subject to eligibility requirements. Ask your loan servicer about the process and any appraisal requirements.

Finding the Right Path to Homeownership

I believe buying a home should begin with understanding what's possible.

That means asking questions, exploring your options, and building a plan that supports the life you want to create.

Whether you're preparing to purchase your first home, moving into something larger, or finding a property that better reflects your next chapter, the financial details deserve just as much attention as the home itself.

And you deserve a team that helps you understand both.

If you're considering buying a home in Snohomish County, I'd love to hear what you're dreaming about and help you explore the possibilities.

Tanya Mock
Managing Broker | Compass
Iconic Homes, Farms + Estates

Live Beautifully. Work Beautifully.

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This article is for general educational purposes. Mortgage programs, insurance requirements, and cancellation eligibility vary. Consult a qualified mortgage lender or loan servicer for guidance specific to your financing.