Home Buying For Dummies, 3rd edition Homeowners dislike paying private mortgage insurance (PMI). The idea of the mortgage holder paying an insurance premium to protect the lender just doesn’t sit right. Using a piggyback loan structure to avoid paying PMI on the first mortgage is an option. The downside to that is the interest rate on the second mortgage is often at an above-market rate, especially if there was no, or little equity in the property. There are some other options as well. Consumers can shop for a first mortgage that doesn’t require PMI, called a self-insured mortgage when the lender prices the default risk into the loan. These loans usually command a higher interest rate than a conventional mortgage.

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