<prompt> Human: How does the math financially work out? For example for a 100K house, instead of down paying 20,000, 80K mortgage to avoid PMI, and instead I take out a 100K mortgage PMI .01 x 100K 1000yr. Couldnt that extra 20K be invested and as long as you beat 5 it would be better?  <response>: Thats roughly correct yes. Keep in mind that putting more down also reduces the amount of interest you pay. Also you arent going to get a 100 loan. Lets assume you need at least 5 down. So you might want to look at it like this. Assume 4 interest rate. 5 down 95k loan, and 1 PMI. So you end up with roughly 3800 in interest in the first year, and 950 in PMI. So 4750 in sunk cost. You also now have 15k in the market. So if it grows at say 6, then you get 900 in return on that. So youve got -4750 900 3850 net cost. Now if you put 20 down. You have an 80k loan, no PMI, no money in the market. In year one, youll have 3200 in interest, and since there is no PMI and no market returns, thats your total net cost. So in that case the 20 down is the better deal. You should extrapolate these out over 5 or 10 years to see how it all ends up with compounding, etc. Also consider if you can deduct the mortgage interest from taxes, reducing that cost a bit.However that 20k is locked up in the house and you cant get to it. The 15k is reasonably liquid and you can sell it. And then on top of that you have the gains on the real estate. If the house goes up 3 a year, then any equity also grows by 3 a year too... SO lots of variables to consider. 