No PMI Mortgages: How to Buy a House Without 20% Down

Private Mortgage Insurance (PMI) is a frustrating reality for modern homebuyers. It is an extra monthly fee, often ranging from $100 to $400 a month, designed to protect the bank—not you—if you default on the loan.

The traditional wisdom says you must save a massive 20% down payment to avoid it. But in 2026, with the median home price skyrocketing, saving $80,000 in cash is a luxury most buyers don't have.

Fortunately, the mortgage market has evolved. There are now several legitimate loopholes and specialized loan programs that allow you to put down 10%, 5%, or even 0% while completely sidestepping PMI. Here are the four best strategies.

What Is Lender-Paid PMI (LPMI)?

This is the most common way to avoid PMI on a standard conventional loan without a 20% down payment.

With Lender-Paid Mortgage Insurance (LPMI), the bank literally pays the insurance premium on your behalf. In exchange, the bank increases your interest rate slightly—usually by 0.25% to 0.50%—to recoup their costs.

What Is the VA Loan Strategy (0% Down, No PMI)?

If you are an active-duty service member, a veteran, or an eligible surviving spouse, you have access to the most powerful mortgage product in America: The VA Loan.

VA loans are guaranteed by the Department of Veterans Affairs. Because the government is backing the loan, banks do not require Private Mortgage Insurance. Better yet, the VA allows for a 0% down payment. You can buy a $500,000 home with zero cash out of pocket and pay absolutely no PMI.

Note: While there is no PMI, VA loans do charge a one-time upfront "Funding Fee," which is usually rolled into the loan balance. This fee is waived entirely for veterans with a service-connected disability.

What Is the 80/10/10 Piggyback Loan?

This is a creative financing structure that allows you to buy a home with 10% down without paying PMI. It works by taking out two loans at the same time:

• 80% First Mortgage: Because this loan covers exactly 80% of the home's value, it avoids PMI.
• 10% Second Mortgage: This is a HELOC or Home Equity Loan used to bridge the gap.
• 10% Cash Down: Your actual out-of-pocket down payment.

You will pay a higher interest rate on the smaller 10% loan, but it is often significantly cheaper than paying a monthly PMI premium. This strategy requires excellent credit (usually 720+) to qualify.

What Are Specialized Physician Loans?

If you are a doctor, dentist, or veterinarian, banks desperately want your business. They know that your earning potential is massive and your default rate is practically zero, even if you currently have $200,000 in medical school debt.

To win you over, many major banks offer specialized "Physician Loans." These programs allow medical professionals to buy homes with 0% to 5% down and no PMI requirement whatsoever. Furthermore, they often exclude student loan debt from the Debt-to-Income (DTI) calculations.

What Is the FHA Warning About PMI?

If you are trying to avoid PMI, you must be extremely careful with FHA loans.

FHA loans are famous for allowing 3.5% down payments. However, they charge Mortgage Insurance Premium (MIP), which is effectively the same thing as PMI. The danger with FHA MIP is that if you put down less than 10%, the insurance premium is permanent for the life of the loan. It never drops off, no matter how much equity you build, unless you completely refinance out of the FHA program.