Hi Nadia -
When making a purchase, everything revolves around the sales price. So in order to avoid PMI, you would have to have 20% down of the $158,000. However, check with your accountant because some PMI programs are now tax deductible. Also, check with your lender. You can refinance after a set amount of time (depending on your loan program) and use the appraised value, not the purchase price, and get out of the PMI. Good luck. It sounds like you found a great investment with instant equity!