Call TODAY to speak with a USDA Home Loan Specialist (855) 474-7169 Primary Residential Mortgage

See if you qualify for a 100% Financing USDA Home Loan

What type of home loan are you looking for?
ZIP Code of the Property
What is the approximate loan amount?
What is your approximate credit score?
What is your name?
Last thing.
How can we contact you?
USDA Home Loan
★ Your information is secure and never shared. Read the privacy policy.

Reasons to Avoid PMI

Putting at least 20 percent of the principal home loan balance can be difficult for some people. That's why the Federal Housing Administration-backed some loans to help them pay a much smaller down payment. However, putting less than 20 percent, or putting at least 3 percent of the principal home loan balance would require you to get the PMI. The PMI or also known as the private mortgage insurance protects the lenders of any possible loss if the home loans go by default. That's some people would rather put the traditional down payment instead of putting a much smaller percentage. But what are the other reasons why borrowers would need to stay away from this insurance as much as possible?

PMI Costs

A general private mortgage insurance would typically range to at least 1 percent of the entire home loan amount every year. It can be an enormous amount if you're going to compute it. So if you have at least $200,000 worth of home loan, the PMI that will be charged would cost $2,000 per year, which is going to be almost $170 per month. It means that this payment would only be an additional charge for borrowers each month which could have been used to pay the actual mortgage instead.

Your Heirs Will Not Get Anything

Since the PMI solely protect the lender alone, your spouse or your family will not get anything from it. You will need to have a different insurance policy if you do want to provide anything for your heirs if you pass away.

You're Giving Your Hard-earned Cash Away

If you think about it, putting less than 20 percent on your down payment would cost you even more. Although you were able to save money since you only paid less than the typical amount required, you would still have to pay the PMI. Since the PMI is meant to protect the lenders alone, your money doesn't go towards your principal. So technically, you are giving away your money.

Charges would Go On

Some lenders require borrowers to keep the PMI for a particular period of the loan's term. It would mean that the borrowers would still be required to pay the PMI even if they reach the 20 percent threshold.

Although putting less than 20 percent on your forward payment is a great alternative option when it comes to purchasing a house, it does come with some pros and cons. So you do have to think things through, especially when it comes to dealing with money matters. You have to make clever decisions to make sure that you wouldn't have any problems in the future.

<< Back to the list.

Check Official USDA Loan Requirements

Get matched with a USDA lender and check your eligibility for 100% Financing.

Start Your Quote →




USDA Home Mortgages

Primary Residential Mortgage, Inc.
10121 N Rodney Parham, Suites C & D
Little Rock, AR 72227
855-474-7169
501-225-5626
NMLS # 3094
Branch NMLS # 252910
Licensed by Arkansas Securities Department 11558
PRMI Privacy Policy
PRMI Terms of Use
PRMI Consumer Voice
PRMI Licenses

Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice.

USDA Eligibility Map

A Loan Officer is waiting to talk to you.
AL AK AZ AR CA CO CT DE FL GA HI ID IL IN IA KS KY LA ME MD MA MI MN MS MO MT NE NV NH NJ NM NY NC ND OH OK OR PA RI SC SD TN TX UT VT VA WA WV WI WY