<prompt> Human: Hello, rpersonalfinance. Im looking for a little advice or just reassurance that Im not being paranoid. My wife and I live in NJ and make a combined 90k yearly. Weve been renting for the last 5 years and our savings is what Id call insufficient based on our lifestyle. We have roughly 35k available as a general fund - its all we have. We have no student loan debt and roughly 900monthly autocc debt I just cut up my card with the intention of not replacing until the balance was zeroed. Weve been pre-approved for 225k, which means nothing based on experience.We have very different ideas about home affordability. Im extremely nervous about going into home ownership without 20 down. Our rent for a small 1 bedroom is 1200 monthly and that even makes me cringe most days. I dont want to mortgage a house that has me paying more than 1400 monthly with taxes and insurance included, which means either building a greater down payment or spending less both things that dont really bother me - I just want a decent school system. I know were not ready.My wife thinks were loaded. Our real estate agent is a family friend and showed us a house in the town we live in over the weekend - asking price 225k. Great house and location, dont get me wrong. Under normal circumstances with the proper financial backing it would be a slam dunk. My wife, however, thinks its perfectly fine to go in with 3.5 down and forego PMI for a .5 increase in the interest rate. Almost 1,800 a month before we turn the lights on, which is 38 of our monthly take-home. Shes adamant that we put in an offer this week. I know our spending habits are not ideal. Our budgeting needs major work. We should have tripled our savings given the length of time weve been together. Am I insane for thinking this house is a bad idea? Assistant: Avoid PMI. Its absolutely a waste of money. If youre not comfortable with the payment, dont do it. If anything happens job loss, injury, etc youll end up resenting your wife. Remember, finances are the primary reason for divorce. Best of luck!Human: Yes, but doesnt PMI drop when a certain amount of equity in the property is built? Like I could pay PMI for 10 years or a half percentage point interest for 30?  <response>: On new FHA loans the PMI never drops off. The only way to get rid of it on newer FHA loans is to refinance once you get 20 equity, and if interest rates have gone up before that happens the refi might be a worse loan.I did a 5 down loan in 2010 where I took a slightly higher rate in lieu of having to pay PMI. The going rate at the time would have been about 4.375, and I ended up getting the loan at a hair under 4.825 but with no PMI. Historically speaking even the people who did do everything right and diligently save their 20 didnt get a rate that good, so I was pretty happy with the deal. Ended up refinancing a few years later anyway when rates came back down again, so only ended up paying the higher rate for 4 years 