Question

Lonette and Al want to purchase a home and avoid paying private mortgage insurance (PMI). What minimum amount of down payment is required for them to purchase a $34,500 home to avoid PMI?

Answer 1

PMI stands for Private Mortgage Insurance. It is a mortgage insurance which buyers of flat need to buy in case of conventional loan. When buyer(s) purchase a home and makes down-payment of less than 20% in that case they need to pay for this insurance.

In the given scenario, Lonette and Al are willing to purchase a home and do not want to pay for PMI. To avoid payment of PMI Lonette and Al needs to make a minimum down payment of 20% of $34500/- I.e.,$6900/-.