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Compare the cost of avoiding PMI with keeping cash

Avoiding private mortgage insurance can reduce borrowing costs, but using nearly all your cash to reach a 20% down payment has a trade-off. Eric’s October 2, 2026 Short recommends comparing a 10% down payment with a 20% option before deciding.

By Eric Hamilton · Published October 6, 2026

Originally uploaded October 2, 2026 · 0:59 · Watch on YouTube

Written companion added October 6, 2026. Adapted from Eric’s video captions with source checks; not a word for word transcript. The recording retains its original date.

Price both options

With a conventional mortgage, PMI is generally required below 20% down and protects the lender. The clip’s $100 monthly example is not a quote for every borrower. Request actual loan pricing, including principal and interest, mortgage insurance, upfront costs and cash remaining after closing. A smaller down payment also means a larger loan balance; the comparison involves more than the PMI premium.

Give the retained cash a purpose

Eric discusses keeping savings, paying other debt or funding work on the home. Decide which need matters in your situation. Keeping cash can provide flexibility, while a larger down payment can lower borrowing costs. Neither choice automatically wins. If avoiding PMI would require a retirement withdrawal, include any income tax and possible early-distribution tax in the calculation. The IRA first-home exception does not apply to a 401(k) withdrawal.

Does this mean I should choose 10% down?

No. Compare the complete costs and remaining reserves. As Eric notes, reviewing alternatives may still confirm that your original down payment is the right fit.

Sources and scope

Adapted from captions of the October 2, 2026 Short. The amounts and down-payment choices are illustrative; actual terms depend on the borrower and loan.

  1. CFPB: Private mortgage insurance Accessed October 6, 2026
  2. IRS: Exceptions to tax on early distributions Accessed October 6, 2026

General education, not a loan quote, approval or an individual recommendation. Ask the appropriate professional about your situation.

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