I must avoid Private Mortgage Insurance (PMI) at all costs.  This means that I’ll have to put 20% down.  After all, mortgage insurance is a waste of money... I don’t get anything in return.

Private Mortgage Insurance is required for most loans that exceed a loan to value of 80%. Private Mortgage Insurance insures the Lender in the event that you default on your mortgage payment and the lender is forced to sell your property at a loss 

We are very fortunate in that mortgage insurance companies have created a number of different types of plans. Over the years, the cost of mortgage insurance has actually declined.  It use to be that a borrower had to pay as much as 1% of the loan amount up front and then pay a significant amount each month.  Mortgage insurance companies now offer plans which require a very small amount at closing together with a regularly scheduled payment each month. Deciding whether you should liquidate some assets to use as additional down payment (to avoid the cost of mortgage insurance) requires that you evaluate what you lose by liquidating those assets.  Many clients find that paying other debt is better then applying additional cash towards the down payment.  Paying off credit cards and car loans may improve cash flow more than avoiding Private Mortgage Insurance. Right now, mortgage insurance is tax deductible as well!