PMI Strategy: PMI strategy is the strategic decision of when to pay Private Mortgage Insurance to enter the market earlier versus waiting to save a full 20% down payment. In most Los Angeles markets, paying $150 to $300 per month in PMI to buy two or three years earlier results in significantly more equity than waiting, because home appreciation typically exceeds the total cost of PMI over that timeframe.
You've been told to avoid PMI. Here's why that advice is costing you.
Private Mortgage Insurance exists to protect the lender — not you. It's required when you put down less than 20%, and it adds a monthly cost to your payment. Everything about the way it's named and described makes it sound like something to avoid.
But PMI has one crucial feature that makes it a legitimate tool: it's temporary. Once your equity reaches 20%, it falls off. You're not paying it forever. And the cost of PMI for 3–4 years is usually far less than the cost of waiting 3–4 years to buy.
In a market like LA, where appreciation has historically been significant, PMI is often the cost of entering the market years earlier, which means years more of equity growth, tax benefits, and locked-in pricing.
The math most buyers never run.
The right answer depends on your specific market, your equity timeline, and what you'd do with the capital. We run this math for every client.
Three things most buyers don't know about PMI.
If your home value has increased enough, you may be able to get a new appraisal and remove PMI before you've paid down to 20% of the original purchase price. In an appreciating market, this can happen significantly faster than expected.
Depending on your income and tax situation, PMI premiums may be deductible. This reduces the effective cost. Talk to your tax advisor — and factor this into the comparison before deciding a 20% down payment is automatically better.
Some programs have the lender pay PMI in exchange for a higher interest rate. This eliminates the monthly PMI line item but builds the cost into your rate permanently. Whether this makes sense depends on how long you plan to hold the loan.
The decision isn't "avoid PMI at all costs." It's "which approach produces the best outcome for your specific situation, timeline, and market?" That's a question I run the numbers on before giving any recommendation.
The Los Angeles PMI calculation is different from anywhere else.
National PMI advice is calibrated to national median home prices — typically $350K–$450K. LA median prices are 2–3x higher. On a $900K purchase with 10% down, PMI might run $400–700/month. That's significant. But LA appreciation has historically been substantial — often 5–8% annually in strong cycles. Over 24 months on a $900K property, that's $90K–$144K in equity growth. The total PMI cost over the same period: $9,600–$16,800. The math still typically favors buying sooner.
LA also tends to build equity toward PMI removal faster than other markets. A property bought in a strong LA neighborhood may already have enough appreciation to hit 20% equity for removal purposes — even before the scheduled amortization gets there. What we model: neighborhood appreciation trends, your specific timeline, and what you'd otherwise do with the down payment capital.
Common PMI mistakes that cost buyers time and money.
In LA, the 20% target gets larger every year prices rise. Buyers who waited in 2019–2021 found themselves further from the goal in 2022 than when they started — despite saving aggressively. The PMI cost during those years would have been less than the missed appreciation.
With a new appraisal, you can request PMI removal using current appraised value rather than original purchase price. Most homeowners don't know this and keep paying PMI 12–24 months past eligibility. I flag this proactively for every client whose home has appreciated significantly.
Lender-paid PMI eliminates the monthly PMI line item in exchange for a permanently higher rate. This works well for buyers planning to sell or refinance within 5 years — and poorly for those planning to stay long-term. The right answer depends on your timeline.
Questions to ask before deciding on your down payment.
Ready to put this strategy to work?
If we're a good fit, you'll know in 15 minutes. If we're not, I'll tell you that too.
I've seen enough — let's talkWhat this looks like for someone who started without 20% down.
I can't say enough about working with Daryn. I was in a situation where I needed to find a home in a rather short period of time. Since this was my first time buying a home, there was a lot for me to learn and a lot of work for me to do in order to qualify for a loan. Daryn is a Godsend! There were many times I felt overwhelmed and defeated but Daryn has a magical way of turning those feelings around and after a few minutes of talking to him, at any time during the process, I was motivated to get it done! Daryn made me, and everything I was doing, feel important! Before I knew it, I was signing papers and getting keys to my new home. We have a plan to keep me on a path to remain a successful homeowner and he provides useful tools so there is no guessing on my part. I have no doubt that Daryn has my best interest at heart.