Home buyers can be faced with paying Private Mortgage Insurance or PMI if they are putting less than a twenty-percent down payment on their new home. This monthly mortgage insurance remains in effect until the borrower has made principal payments to have twenty-percent equity or appreciation now vests them with at least twenty-percent equity. Some mortgage lenders now offer programs to eliminate PMI. These new programs offer borrowers a first mortgage for eight-percent, and a second mortgage for fifteen percent with a five percent down-payment. This loan is PMI-free.

Here is an example; say a buyer is purchasing a home for $250,000. The buyer could take out a first mortgage for $200,000 or eighty-percent of the purchase price. The buyer can also arrange for a second mortgage of $37,500 which is fifteen=percent of the purchase price. The buyer would then make a five-percent down payment. This is referred to a 80-15-5 program. In this situation the buyer would not be required by the mortgage lender to take out Private Mortgage Insurance, which would run about $100 dollars a month.

An additional advantage of the 80-15-5 program is that the mortgage interest on the second mortgage is tax deductible. PMI insurance premiums is not deductible, but legislation has been introduced to allow PMI to deductible as well.