I’m Michael DiVita — DRE #01372066 | NMLS #241655, DiVita Home Finance (DRE #01818285 | NMLS #323700), Tiburon, CA. I’ve been in California mortgage lending since 2000 and founded DiVita Home Finance in 2007. PMI avoidance strategies are something I model for every buyer who is short of 20% down — the right approach depends on your specific purchase price and holding period. Call (800) 239-1103.
In California’s market, coming up with 20% down is a serious hurdle. On a $1.2M home in Marin, that’s $240,000. PMI can add $400–$800/month on loan sizes this large — but there are several legitimate strategies to avoid it without the full 20% down.
Strategy 1: The 80-10-10 Piggyback Loan
Take a first mortgage at 80% of the purchase price, a second mortgage (HELOC or home equity loan) at 10%, and put 10% down yourself. The first stays at 80% LTV — no PMI required. The second carries a higher rate, but the combined monthly cost is typically lower than what PMI would add. This is the most common PMI-avoidance strategy I use with Marin and Bay Area buyers who have strong income but haven’t accumulated a full 20% down.
Strategy 2: VA Loan — No PMI, Ever
VA loans have no PMI requirement, regardless of your down payment — including 0% down. If you’re a veteran, active duty, or eligible surviving spouse, a VA loan is almost always the best product available to you in California. No PMI is just one of the benefits; the rate and terms are typically excellent too. See: VA Loans California.
Strategy 3: Lender-Paid PMI (LPMI)
Your lender pays the PMI premium in exchange for a slightly higher interest rate — typically 0.25%–0.5% above market. You have no monthly PMI charge; it’s embedded in the rate. This works well if you plan to sell or refinance within 5–7 years, before the total extra interest paid exceeds what standard PMI would have cost. If you’re staying long-term, it usually loses out.
Strategy 4: Portfolio Lender No-PMI Products
Some California portfolio lenders offer 85%–90% LTV products with no PMI at slightly above-market rates. These are underwritten in-house and don’t conform to Fannie/Freddie guidelines, which gives lenders flexibility. Ask specifically about no-PMI portfolio products — not every lender has them and they aren’t widely advertised.
Strategy 5: Down Payment Assistance to Hit 20%
Programs like GSFA Platinum (up to 6% grant) and CalHFA MyHome (up to 3.5% deferred loan) can bridge the gap to 20% down without you having to save the full amount yourself. Many buyers who assume they don’t qualify for income-limited programs actually do — especially in higher-income-limit counties. Call me to check your specific eligibility.
Strategy 6: Single-Premium PMI Upfront
Some lenders allow you to pay PMI as a lump sum at closing — typically 1%–2% of the loan amount — instead of monthly. Lower monthly payment without the piggyback complexity. Good if you’re selling within 5 years and want a cleaner monthly payment structure without a second lien.
Is PMI Actually That Bad?
Sometimes the right answer is just to pay PMI. In an appreciating California market, you can hit 80% LTV faster than you’d expect — often in 2–3 years — and request removal. Keeping cash liquid has real value. If your PMI rate is 0.3%–0.5% on a strong credit profile, it may cost less than the opportunity cost of tying up $100K+ in a down payment instead of keeping it invested or liquid.
Frequently Asked Questions — How to Avoid PMI in California
What is a piggyback loan and how does it avoid PMI in California?
A piggyback loan (also called an 80-10-10) uses a first mortgage at 80% LTV and a second mortgage at 10%, with 10% down from the buyer. Because the first mortgage stays at or below 80% LTV, no PMI is required — even though the buyer is only putting 10% down. The second mortgage carries a higher rate than the first, but the combined payment is typically lower than it would be with PMI on a 90% LTV first mortgage. Piggyback loans are one of the most common PMI-avoidance strategies I use for Bay Area buyers at purchase prices between $800K and $2M.
Can I avoid PMI with less than 10% down in California?
It’s possible through specific programs. VA loans allow 0% down with no PMI for eligible veterans and active-duty military — no exceptions and no workarounds needed. Some portfolio lenders offer no-PMI products at lower down payments (85%–90% LTV) at slightly higher rates. Down payment assistance programs like GSFA Platinum can also provide grant funds to supplement a smaller down payment and push the buyer closer to 20%. Each approach has trade-offs in rate, structure, or eligibility — I model the total monthly cost for each option against your specific purchase price.
Is lender-paid PMI worth it on a California home?
LPMI makes financial sense primarily for buyers who plan to sell or refinance within 5–7 years. The higher rate you accept in exchange for no monthly PMI will cost more in total interest than canceling standard PMI would have over a longer hold. For California buyers — where appreciation tends to push you above 80% LTV within 2–4 years in most markets, triggering PMI removal — standard PMI is often the better choice if you plan to stay. I run the break-even for both options specific to your purchase price, rate environment, and intended hold period before recommending.
Talk to Michael Directly
DiVita Home Finance | Tiburon, CA | In lending since 2000, founded DiVita Home Finance in 2007. Michael DiVita DRE #01372066 | NMLS #241655. Company DRE #01818285 | NMLS #323700.
💬 Text: (310) 849-9124
