Many borrowers who have less than 20% equity in their home choose a combination first and second mortgage (referred to as a piggyback mortgage) to avoid mortgage insurance (PMI). The most common method of financing without PMI is an 80/20 (an 80% 1st mortgage and a 20% 2nd mortgage). Also available is LPMI or Lender Paid MI. These mortgages do not carry PMI, however, the interest rate is a little higher than normal. Typically the savings on a LPMI loan versus a low-interest loan with PMI is pretty high. The LPMI monthly payment will be lower.

 

 ++