Here's something I need to address because I keep hearing it from families all over Lafayette, Orinda, Moraga, and Walnut Creek: "Kelly, we're not buying until we have 20% down because we refuse to pay PMI."
Look, I understand nobody wants extra monthly payments. But after working with families in the Lamorinda market for years, I've watched too many good people miss out on homes they could already be living in - homes where they'd be building equity and creating memories - because they're treating PMI like it's some kind of financial disaster.
It's not. PMI is just a tool, and when you understand how to use it, it can actually help you get into the right home faster.
What PMI Actually Is (And What It Costs)
PMI (Private Mortgage Insurance) kicks in when you don’t put at least 20% down on a home. It protects the lender, not you - I won't sugarcoat that. But here's what it actually costs in our market: usually around $300-500 per month on a $1.2 million home, depending on your down payment.
That sounds like a lot until you compare it to what you're probably paying in rent, or what you might pay extra if you wait and prices go up.
Why People Panic About PMI (And Why They Shouldn't)
People hear "extra monthly cost" and immediately think they need to avoid it. But here's what I've learned working with families in our area: waiting often costs more than PMI ever will.
Let me give you a real example from last year. I had a family looking at a home in Orinda for $1.3 million. They had $195,000 saved but wanted to get to $260,000 to avoid PMI completely. Their PMI would have been about $380 per month.
They decided to wait and save that extra $65,000. It took them 14 months. When they were finally ready, similar homes in that same neighborhood were starting at $1.45 million. They ended up paying $150,000 more for a comparable home.
That $380 monthly PMI they were so worried about? Over 14 months, it would have cost them $5,320. Instead, they paid an extra $150,000. And missed 14 months of building equity in a home they loved.
The Real Cost of Perfect Timing
This is what happens when you try to time everything perfectly in real estate. While you're saving for that ideal down payment, life keeps moving. Home prices don't wait for your savings account.
And here's something else people don't think about: your kids are growing up. You're living in a space that doesn't work for your family. You're missing out on actually enjoying your life because you're focused on avoiding a monthly payment that might be less than what you spend dining out.
Real estate is personal. It's about finding a home where your family can thrive, not just optimizing every financial detail.
How Smart Buyers Use PMI
The families who are winning in our market right now understand that PMI can actually work in their favor. Here's how:
Keep Cash for What Matters: Instead of putting every penny into your down payment, keep some cash for the improvements most homes in our area need. Why buy a house you're not excited about just to avoid PMI when you could buy one you love and make it perfect?
Get In While You Can Negotiate: Right now, while everyone else is being cautious, you have negotiating power. Sellers are more flexible on price and repairs. When everyone else jumps back in, that advantage disappears.
Start Building Equity Now: Every month you own, you're building equity. Every month you rent, you're building equity for someone else. PMI doesn't change that math.
When PMI Makes Sense for Your Family
PMI works when:
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You've found a home you love in an area you want to live
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The total monthly payment (including PMI) fits comfortably in your budget
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You have steady income and some emergency savings beyond your down payment
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You're planning to stay and build roots in the community
PMI doesn't make sense when:
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You're stretching beyond what you can truly afford
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You're buying just to buy, not because you found the right home
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You don't have any financial cushion beyond the down payment
It's about your specific situation and your family's needs, not some universal rule about avoiding PMI.
Move-Up Buyers: You're Thinking About This Wrong
I see move-up buyers all the time who are stuck because they don't want to give up their low interest rates, and they also don't want PMI on their next home.
But here's what I tell them: if you need more space for your growing family, PMI might be what gets you there. Maybe you keep your current home as a rental property. Maybe you use the extra cash for improvements that make your new house exactly what you want.
Life doesn't wait for perfect financial conditions. Your kids won't get their childhood back. You won't get those years in your dream home back either.
The Tax Advantage Factor
Here's something many buyers overlook: the tax benefits of homeownership often offset a significant portion of PMI costs.
Mortgage interest deduction, property tax deduction, and potential capital gains exclusions can reduce your effective PMI cost by 25-35% depending on your tax bracket.
Factor in the wealth building through appreciation and principal reduction, and PMI becomes one of the best investments most people never realized they were making.
Building Generational Wealth
The families building serious wealth in our market aren't the ones waiting for perfect conditions. They're the ones who understand leverage and use it strategically.
PMI allows you to control a valuable asset with less capital down, freeing up money for other wealth-building activities. This is how successful real estate investors think, and there's no reason homebuyers shouldn't think the same way.
Taking Action in Today's Environment
Our current market in Lafayette, Moraga and Orinda actually favors buyers who understand these concepts. While everyone else is waiting for rates to drop or saving for larger down payments, smart buyers are negotiating better prices and terms with sellers who are motivated to close deals.
The inventory is there. The opportunities are there. The only question is whether you'll let PMI fears keep you from taking advantage of them.
Final Thoughts
Too many buyers are sitting on the sidelines trying to game the system waiting for the perfect rate, the perfect house, the perfect time. That’s not how this works. The perfect time is when you find a house you like and can afford. If you can afford the monthly payment and you love the place, that’s your sign.
PMI doesn’t cost you money. Missing out on appreciation does.
Your Next Steps
Do not look at PMI as a barrier and instead use it as a wealth-building accelerator. By playing out the math on your own circumstances, you can determine the substantial amount of growth by purchasing earlier instead of later, particularly when taking the appreciation you'll gain by getting into the market sooner. In addition, the money you save on a lower down payment can be invested in your new property again, adding value another way. Wealth-building sometimes means taking calculated bets, and PMI, when utilized wisely, is one of the lowest-risk, highest-reward moves in real estate. It's really about building your long-term wealth, and PMI, applied intelligently, assists with exactly that.
Want to Talk Through Your Options?
If you're not sure whether now is the right time for you, let's talk. I’ll give you straight answers and real advice — no sales pitch. Sometimes the smartest move isn’t waiting. It’s getting started.
— Kelly Crawford
Realtor, Kelly Crawford Team – Lafayette, CA
