Mortgage loan agreement application with house shaped keyringThe down payment on a mortgage acts as the first hurdle home buyers face. Lenders recommend that home buyers place down 20 percent on their loan, yet that sum of money can be difficult to save up. You can still pay a down payment less than 20 percent, yet you have to pay private mortgage insurance (PMI). What will you choose?

Choose the less-than-20 route.

When you want to place a down payment less than 20 percent, you have to face the challenge of private mortgage insurance. PMI acts a safeguard on the part of the lender in case you default on your loan, but you pay for that protection. PMI can significantly add more to your housing expenses.

Bypass the challenge.

You can bypass PMI, however, by choosing mortgages without PMI in Salt Lake City called piggyback loans or 80/10/10 loans. With such loans, you take out a mortgage for 80 percent of your home and pay 10-percent down payment. For the remaining 10 percent of your home, you will receive a second “piggyback” loan with its own terms and rate.

Choose the 20-percent route.

Of course, a piggyback loan means more debt on your part; the 20-percent down payment may seem less daunting now. You can make that 20-percent down payment through several ways. You can save up the old-fashioned way; you can open a separate savings account to keep you from using the savings.

Save up in other ways.

Aside from saving extra money, you can dedicate any gift cash, purchase refund, tax refund and work bonus toward your down payment. Alternately, if you get a raise, you can save the difference between your old and new salaries. When you want to enjoy all those extra cash, you can instead save by selling things you have that have cost a lot, such as sports equipment.

You can think of many other ways to save enough for the 20-percent down payment. Otherwise, if you can stand the added debt, you can take out a piggyback loan from your lender.