Mortgage Insurance, also known as PMI, MIP, and MI, is nothing more nor less than an insurance fund or premium charged to insure any single mortgage over 80% LTV (Loan-To-Value). This monthly premium, which can add up significantly over the life of your loan, is not interest or principal and therefore is NOT TAX DEDUCTABLE. In most cases it can be considered a waste of your money. There are a few exceptions to this rule, but in most instances PMI is an unnecessary expenditure for a Borrower and should be avoided.
The easiest way to avoid paying Mortgage Insurance with conventional loans is simply to not have any single loan on your property over 80% of the value of the home. You may wish to finance up to 100% of your property, so to do this and avoid PMI, you would obtain TWO (2) loans. A first mortgage at 80% of value and a second mortgage at 10-15% of value (with a down payment) or 20% of value (NO DOWNPAYMENT). With this type of mortgage structure, 100% of every payment benefits you towards either principal or interest of your loan(s). Principal payments building equity and the interest payments which are TAX DEDUCTABLE!