The simple truth of the matter is that unless the individual can place twenty percent or more of the purchase price of the home as a down payment, he is going to be required to obtain private mortgage insurance. Private mortgage insurance, or PM, is acquired to secure the lender's investment or provision of the mortgage. It protects the lender in the event that the borrower defaults on his loan and fails to repay the full amount. PMI acts as additional collateral for the mortgage.

Private insurance companies provide this type of insurance to borrowers. The monthly premium for this additional expense is added into the mortgage payment as a sort of guarantee that it will be paid, maintaining the security of the investment. Unfortunately, this practice makes an already large mortgage payment even larger.

However, it is possible to avoid private mortgage insurance even if you cannot offer twenty percent of the purchase price as the down payment. The borrower can obtain two separate mortgages for the purchase of the home. Together, these two mortgages will provide the money needed to make the purchase while avoiding the extra cost of private mortgage insurance.

The second mortgage is taken for the amount that was shaved off the first mortgage so that the homeowner could meet the twenty percent obligation for the down payment. Plus, another benefit to this scenario is the fact that the interest charges on both mortgages can be itemized on tax returns whereas the cost of the private mortgage insurance could not be itemized.