PMI (private mortgage insurance) is a type of mortgage insurance you might be required to pay for if you have an FHA loan (3.5% down payment) or a conventional loan with less than 20% down. The traditional way to avoid paying PMI on a mortgage is to take out a piggyback loan. In that event, if you can only put up 5 percent down for your mortgage, you take out a second 'piggyback' mortgage for 15 percent of the loan balance, and combine them for your 20 percent down payment. Most people will just end up paying the PMI in their loan and drop it when they are able to refinance their home.