Yes, private mortgage insurance alternatives are available, and for many Glen Allen buyers the right one can cut a monthly payment by hundreds of dollars. The options are a larger down payment, a piggyback second loan, lender-paid PMI, and government-backed loans (VA, FHA, and USDA where the address qualifies). Each swaps the standard monthly premium for a different cost, such as a higher rate, a second payment, or a funding fee. I’m Duane Buziak, NMLS #1110647, and below I explain how PMI works, compare each alternative, run the numbers on a Henrico County purchase, and show how to compare them with a soft credit pull mortgage process that leaves your score alone.
Why Glen Allen Buyers Pay PMI and What It Actually Costs
By Duane Buziak, NMLS #1110647, Glen Allen Mortgage Broker of the Year 2025
Private mortgage insurance is a policy that protects the holder of the loan, not you, if a borrower defaults. Conventional loans with less than 20% down generally require it. You pay the premium, but the coverage belongs to the investor who owns the loan, which is why it feels like paying for something you never get to use.
Take a buyer in Twin Hickory or Wyndham putting 5% down on a Henrico County home. The premium for that buyer is priced on three things: credit score, down payment, and loan term. Someone with a 760 score and 5% down might see a modest premium, while someone at 660 with the same down payment could pay several times as much. That is why any published “PMI rate” is only a starting point, and why I quote each borrower individually.
The biggest misconception is that PMI is permanent. Under the federal Homeowners Protection Act, borrower-paid PMI on a conventional loan can be requested for cancellation once your balance reaches 80% of the home’s original value, and it must terminate automatically at 78% on the original amortization schedule if you are current on payments. The CFPB explains the cancellation rules in plain language. FHA mortgage insurance follows different rules, and on many low-down-payment FHA loans it stays for the life of the loan.
The other misconception is that 20% down is mandatory. It is not. It is only the point where the insurance requirement usually ends, and there are several ways to get a similar result with less cash.
Private Mortgage Insurance Alternatives Are Available Within Conventional Loans
Put 20% down. This is the simplest route: no PMI, and usually better pricing. But on a $450,000 Glen Allen home that means $90,000, and emptying your savings to reach it can leave you exposed when the water heater fails in month three. Reserves matter as much as the down payment.
Piggyback (80/10/10). You take a first mortgage at 80% of the price, a second loan or HELOC for 10%, and put 10% down. With the first loan at 80%, no PMI applies. The trade-off is a second payment, typically at a higher rate than the first mortgage, and availability varies by program and investor. It tends to work when the second loan’s payment is lower than the PMI it replaces and you expect to pay the second loan off early.
Lender-paid PMI (LPMI). The insurance premium is built into a higher interest rate instead of showing up as a separate monthly charge. That is not free: you pay for it through the rate, and unlike borrower-paid PMI it cannot be cancelled later except by refinancing. It suits people who expect to sell or refinance within several years, and it can also help debt-to-income ratios because there is no separate premium line.
Low-down-payment conventional programs. Fannie Mae and Freddie Mac offer products, such as HomeReady and Home Possible, with as little as 3% down and reduced mortgage insurance coverage for eligible buyers, generally with income limits. Terms change, so confirm current eligibility at Fannie Mae’s single-family site before relying on any summary, including mine.
Because Duane Buziak shops hundreds of wholesale lenders, I can price all of these structures for the same borrower and loan amount side by side. A single retail company can only show you what is on its own shelf, and the differences in LPMI and piggyback pricing between investors can be larger than most buyers expect.
Government-Backed Loans That Replace PMI With Different Costs
VA loans
Eligible veterans, service members, and surviving spouses can buy with no down payment and no monthly mortgage insurance at all. The trade-off is the VA funding fee, which can be financed into the loan and is waived for veterans receiving service-connected disability compensation and certain others. Fee percentages depend on down payment and whether it is your first use of the benefit. As of this writing the first-use fee with under 5% down is 2.15%, but confirm the current schedule on the VA funding fee page.
FHA loans
FHA replaces PMI with an upfront mortgage insurance premium (currently 1.75% of the base loan, usually financed) plus an annual premium billed monthly. For borrowers with lower credit scores and small down payments, FHA can still cost less than conventional with PMI, because conventional PMI pricing rises sharply as scores fall. How long the premium lasts depends on the down payment: with less than 10% down it generally lasts the life of the loan, while 10% or more down generally shortens it to 11 years. Verify current premium rates on HUD’s loan information page.
Some buyers pair FHA with down payment assistance such as Dynamo DPA or Turbo DPA to cover part of the cash needed. Program terms, eligibility, and repayment structures change, so I confirm them at the time of application rather than assuming.
USDA loans
USDA loans carry an upfront guarantee fee and an annual fee instead of PMI, with income limits and a requirement that the property sit in an eligible rural area. Most of Glen Allen and the Innsbrook and Short Pump corridors are likely ineligible, but I do not assume either way. Check any specific address on the USDA eligibility map before planning around it.
A Worked Dollar Example: Glen Allen Home at 5% Down
This is an illustration, not a quote. Suppose a $450,000 Glen Allen purchase with 5% down ($22,500), so a $427,500 loan. All rates below are hypothetical; for real market context, see Freddie Mac’s Primary Mortgage Market Survey, which publishes dated weekly averages.
- Conventional with PMI: 6.25% for 30 years gives principal and interest of about $2,632. Add PMI at an assumed 0.5% annually ($178 per month) for roughly $2,810.
- Piggyback, 10% down ($45,000): a $360,000 first loan at 6.25% is about $2,217, plus a $45,000 second at an assumed 8.5% over 20 years at about $391. Total about $2,607, roughly $203 per month less, but it needs $22,500 more cash at closing.
- Lender-paid PMI: an assumed rate of 6.625% on $427,500 is about $2,737, roughly $73 less per month, with no cancellation.
- FHA, 5% down: the 1.75% upfront premium ($7,481) financed makes a $434,981 loan. At an assumed 6.0% that is about $2,608, plus annual premium of 0.55% (about $199 per month) for roughly $2,807, close to conventional, with the premium lasting the loan’s life at this down payment.
- VA, 0% down, funding fee not waived: $450,000 plus a 2.15% fee ($9,675) is a $459,675 loan. At an assumed 6.0% that is about $2,756, with no monthly insurance and no down payment.
Over a 7-year hold (84 months), the piggyback saves about $17,000 in payments against the PMI loan, LPMI about $6,100, and VA about $4,500. FHA is essentially a tie. Notice that the conventional loan’s balance after seven years is around $385,000, still above the $360,000 that equals 80% of the original price, so PMI would still be running. If the home appreciated about 7% and the servicer accepted a reappraisal, the balance would reach 80% of the new value (about $481,000) and PMI could come off. That is the variable that can flip the answer.
PMI Alternatives Side by Side
Here is how each option compares on the factors that decide the choice. Every entry assumes typical program rules that can change, so treat this as a map, not a promise.
- Conventional with borrower-paid PMI: minimum down payment about 3% to 5%. The cost is a monthly premium based on credit, down payment, and term. It can be removed at 80% LTV by request or 78% automatically. The trade-off is a payment bump early on. It fits buyers with strong credit who expect to build equity or see appreciation.
- 20% down: minimum 20%. There is no insurance cost. Nothing needs removing. The trade-off is heavy cash use and thin reserves. It fits buyers with ample savings after closing.
- Piggyback 80/10/10: 10% down. The cost is a second-loan payment at a higher rate, with no PMI. The second loan is paid off or refinanced instead of cancelled. The trade-off is two payments and program availability that varies. It fits buyers with 10% who can pay the second loan down quickly.
- Lender-paid PMI: about 3% to 5% down. The cost is a higher rate, with no separate premium. It cannot be cancelled, only refinanced away. The trade-off is that the higher rate stays. It fits shorter holding periods.
- FHA: 3.5% minimum. The cost is an upfront premium plus an annual premium. Under 10% down it generally lasts the life of the loan; 10% or more shortens it to 11 years. The trade-off is that the premium outlasts a conventional cancellation. It fits lower credit scores and smaller down payments.
- VA: 0% down for eligible borrowers. The cost is a funding fee, often financed, with no monthly mortgage insurance. There is no insurance to remove. The trade-off is the fee, unless exempt. It fits veterans, service members, and surviving spouses.
- USDA: 0% down. The cost is an upfront guarantee fee plus an annual fee. It lasts as long as the loan. The trade-off is property and income eligibility limits. It fits only addresses that pass the eligibility map.
On comparing providers: Rocket, Movement, and Alcova operate as retail companies that price from their own product lines, which is a legitimate model with its own strengths. A broker instead sends one application across hundreds of wholesale lenders, so each structure above can be priced against many investors. It is about breadth of comparison, not a claim that any one provider is wrong for you.
How to Compare Your Options Without a Credit Hit
Duane Buziak uses the NoTouch Credit Pull, a soft pull mortgage broker process, so you can see how each structure prices out before any hard inquiry hits your report. That means a no hard inquiry mortgage pre approval: real options on paper, a mortgage pre approval without hard pull, and no credit hit mortgage application at the comparison stage. I call it Dare to Compare, because the numbers should hold up next to anyone else’s.
It also helps to know the rate-shopping rule. Common scoring models generally treat multiple mortgage inquiries within a short window as a single inquiry, but the length of that window varies by scoring model. The CFPB’s home-buying resources cover how shopping and credit interact.
- Gather two years of income documents, recent pay stubs, and bank statements for the down payment and reserves.
- Run the soft credit pull mortgage review so pricing reflects your actual profile.
- Ask for each structure quoted on the same loan amount and purchase price: PMI, piggyback, LPMI, FHA, and VA if eligible.
- Compare monthly payment plus cash to close, not payment alone.
- For every option, ask when the insurance cost can be removed and what it takes.
One forward-looking point: the exit plan matters. Some investors are moving to VantageScore 4.0 in certain workflows, and cash-out refinances up to 90% of value can be available on some programs, both of which can matter when you refinance later to shed mortgage insurance. Confirm current details with me before counting on either.
Already Paying PMI? Ways to Remove It
If you have a conventional loan with borrower-paid PMI, request cancellation in writing once your balance reaches 80% of the original value and you have a good payment history. Automatic termination comes at 78% on the original schedule, so the request simply gets you there sooner.
Home values in areas like Innsbrook and Wyndham have moved over time, and a new appraisal may show you have reached 80% earlier than the schedule says. Servicers differ on seasoning requirements, appraisal rules, and which valuation they accept, so ask yours for its written policy before paying for an appraisal.
The other path is refinancing out of PMI, or out of FHA mortgage insurance, once equity reaches roughly 20%. Suppose your PMI is $178 per month and refinancing would cost $4,500 in closing costs. Your break-even is about 25 months ($4,500 divided by $178), assuming the new payment is otherwise equal. Where a refinance fits, ask about no-out-of-pocket closing options, which can move costs into the rate or loan balance, and factor that into the break-even instead of ignoring it. If the rate would rise above what you have now, the math changes, so run it before you commit.
Choosing the Right PMI Alternative for Your Glen Allen Purchase
My takeaway after years of doing this: the right option depends on three things, your down payment, your credit, and how long you plan to stay. A short hold favors lender-paid PMI or a piggyback. A longer hold with strong credit and expected appreciation favors standard PMI you can cancel. Lower credit or a thin down payment often points toward FHA, and eligible veterans should look at VA first.
If you would like to see your own numbers side by side, call 804-212-8663 or stop by 4860 Cox Rd, Glen Allen, VA 23060. Ready to experience stress-free mortgage approval with no credit hit and access to hundreds of lenders at once? Get your free mortgage consultation today and discover why Glen Allen families trust Duane Buziak for personalized guidance and the fastest close times in the area.
