I would recommend that you come in with the 20% down up front if you have the money. PMI Insurance is a waste of money and the bank will not remove the PMI insurance once you have reached the proper Loan to Value limit unless you call the bank directly and ask them to remove the PMI. If you forget, the bank will continue to charge you for the service until you call them directly. Lastly, while you may find things tight financially in the beginning, in the long term you will be in a much better position financially with more security and peace of mind. Best of luck!
You may qualify with a minimum 620 fico score for only 5% down with conventional financing with NO Mortgage insurance (Lender paid MI). It only takes a few dozen questions to qualify in minutes for the program to fit your needs the best financially. Here are some links to study and consider.
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With today's low interest rates, you may wish to opt for a 15 or 20 year mortgage. You will get a lower interest rate, lower PMI payment, and your equity will build much faster. A rule of thumb to remember is that 15 years into a 30 year mortgage you've only paid 1/3 of the original balance.
PMI can usually be cancelled according to terms specified in your loan paperwork. You can contact your lender for details.
I have seen homeowners cancel their PMI on a regular basis, and I have been able to cancel it personally. Cancellation of PMI is more frequently seen in an upward market.
If you can afford to put down 20%, I would highly recommend it, but do not deplete your savings, emergency fund or retirement to avoid PMI.