PMI is one of those things that always looks worse the more you dig into it. Here’s how it played out for me:
- I pushed back on the PMI rate. Didn’t get far. Lender basically shrugged and said, “That’s the rate for your LTV.” No room for negotiation, at least with the big banks.
- Tried shopping around. Some smaller lenders offered a slightly better PMI, but their base rates or fees were higher, so it was a wash.
- Ended up just biting the bullet and putting more down to avoid PMI altogether. Not ideal, but the math made more sense long-term.
One thing I’ve noticed—these “physician loans” or “special” loans love to advertise “no PMI,” but the rate is padded to cover their risk anyway. It’s just baked in somewhere else. I’ve run the numbers on a few of these for clients, and honestly, you’re usually better off with a conventional loan and just paying PMI for a year or two, then refinancing or dropping it once you hit 20% equity.
Funny thing, I had a lender once try to sell me on a “discounted” PMI rate if I set up auto-pay and opened a checking account with them. The discount was like $12/month. Not exactly life-changing.
Bottom line, I wouldn’t count on negotiating PMI unless you’ve got a super strong file or a relationship with a local lender. Most of the time, it’s just a line item you have to plan for, unless you can swing a bigger down payment. The “no PMI” pitch is mostly marketing fluff in my experience.
PMI is one of those things that always looks worse the more you dig into it.
I get where you’re coming from, but I think there’s a bit more nuance with physician loans than just “marketing fluff.” While it’s true that the rate is often padded, for some high-earning professionals who are just starting out and don’t have the cash for a big down payment, these loans can be a real bridge. The “no PMI” feature isn’t always just smoke and mirrors—sometimes it genuinely helps with cash flow early on, even if you end up paying a bit more in interest.
Also, on the negotiation front, I’ve seen credit score improvements make a surprising difference in PMI rates. It’s not always huge, but if you’re close to a threshold, bumping your score by 20-30 points can sometimes move the needle. Not saying it’s a magic bullet, but it’s worth considering before writing off all options.
Not sure I totally agree about the “no PMI” being a win every time. I’ve had clients run the numbers and sometimes the higher interest rate on those physician loans ends up costing more long-term than just paying PMI for a bit and then refinancing. It really depends on how long you plan to stay put and how fast you can build equity. The marketing definitely glosses over that part.
- Totally agree, the “no PMI” pitch isn’t always the slam dunk it’s made out to be.
- Higher rates on physician loans can eat up any PMI savings, especially if you’re not planning to stay in the house long-term.
- I’ve run the math myself—sometimes paying PMI for a year or two, then refinancing, comes out cheaper.
- It’s easy to get distracted by the upfront perks, but you’ve gotta look at the total cost over time.
- Also, those “no PMI” loans usually have stricter rules if you want to pay extra or refinance early... something to watch for.
Totally hear you on the “no PMI” loans not being the golden ticket. I actually went through this last year and, like you said,
It’s wild how much those higher rates add up. Also, I found out the hard way that some of these loans make it a pain to throw extra at the principal—read that fine print twice. If you’re not planning on staying put for years, sometimes a plain old conventional loan + short-term PMI just wins out.“sometimes paying PMI for a year or two, then refinancing, comes out cheaper.”